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DRAFT Higher Education Opportunity Act (HEOA)

Impact Summary

Title IV Parts A, B, D, F, G, H, and I/ Title I Parts A, C, and D/Title X

The Higher Education Opportunity Act (Public Law 110-315) reauthorizes the programs under Higher Education Act of 1965 (HEA), as amended. The Higher Education Opportunity Act (HEOA) was signed by President Bush on August 14, 2008. The last reauthorization of the HEA was in 1998. This law is a compromise of reauthorization legislation introduced in Congress. The Higher Education Amendments of 2007 (S.1642) passed by the Senate (95-0) on July 24, 2007 and the College Opportunity and Affordability Act of 2007 (H.R.4137) passed by the House Education Committee on November 9, 2007. On February 7, 2008, the House passed the bill (354-58) and renamed it the College Opportunity and Affordability Act of 2008 (H.R.4137). The House and Senate are required to pass identical versions of a bill. The College Opportunity and Affordability Act of 2008 (H.R.4137) was unanimously passed by the Senate with amendments on July 29, 2008. The Conference Committee, made up of members of the Senate and House, renamed the bill the Higher Education Opportunity Act (H.R. 4137). The bill was voted on and agreed to by the House (380-49) and Senate (83-8) on July 31, 2008 and sent to the White House. This Impact Summary has been developed by OGSLP to highlight major loan provisions of the HEOA. The information contained in this document will be updated as OGSLP receives clarification and additional guidance from the U.S. Department of Education (ED), the National Council of Higher Education Loan Programs (NCHELP), and other industry sources. This document includes any effective trigger dates listed in the HEOA provisions, some beginning as early as August 14, 2008, the date of enactment. OGSLP will continue to work with NCHELP regarding the effective dates of these provisions.

Note: This summary is intended for informational purposes only. Refer to the bill for specific information. of 103 Draft – OGSLP Last Updated June 19, 2009

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h4137enr.txt.pdf


Table of Contents

TITLE IV STUDENT ASSISTANCE - PART A - GRANTS........................................................................................................................ 5 PELL GRANTS ........................................................................................................................................................................................................................................................... 5

TITLE IV STUDENT ASSISTANCE - PART B – FEDERAL FAMILY EDUCATION LOAN PROGRAM (FFELP) ................................... 6 ESTIMATED FINANCIAL ASSISTANCE................................................................................................................................................................................................................ 7 DEFERMENTS ........................................................................................................................................................................................................................................................... 7 LOAN TRANSFER OR SALE.................................................................................................................................................................................................................................... 8 GUARANTOR PROHIBITED INDUCEMENTS....................................................................................................................................................................................................... 8 INCOME-BASED REPAYMENT PLAN................................................................................................................................................................................................................... 9 FORBEARANCE ...................................................................................................................................................................................................................................................... 11 SERVICEMEMBERS CIVIL RELIEF ACT............................................................................................................................................................................................................. 12 DUPLICATIVE NOTICE REQUIREMENT ............................................................................................................................................................................................................ 14 GUARANTOR INFORMATION ON DEFAULTS.................................................................................................................................................................................................. 14 PLUS LOANS............................................................................................................................................................................................................................................................ 15 CONSOLIDATION LOANS..................................................................................................................................................................................................................................... 18 REHABILITATION .................................................................................................................................................................................................................................................. 20 UNSUBSIDIZED STAFFORD LOANS ................................................................................................................................................................................................................... 21 TEACHER LOAN FORGIVENESS ......................................................................................................................................................................................................................... 22 LOAN FORGIVENESS FOR SERVICE IN AREAS OF NATIONAL NEED........................................................................................................................................................ 22 LOAN REPAYMENT FOR CIVIL LEGAL ASSISTANCE ATTORNEYS ........................................................................................................................................................... 23 REPORTS TO CONSUMER REPORTING AGENCIES AND SCHOOLS ............................................................................................................................................................ 25 LENDER REQUIRED DISCLOSURES ................................................................................................................................................................................................................... 26 GUARANTORS – CONSUMER EDUCATION INFORMATION ......................................................................................................................................................................... 31 COHORT DEFAULT RATE..................................................................................................................................................................................................................................... 31 LENDER PROHIBITED INDUCEMENTS.............................................................................................................................................................................................................. 33 SCHOOL AS LENDER............................................................................................................................................................................................................................................. 35 TOTAL AND PERMANENT DISABILITY DISCHARGE..................................................................................................................................................................................... 35

TITLE IV STUDENT ASSISTANCE - PART F – NEED ANALYSIS........................................................................................................ 37 COST OF ATTENDANCE........................................................................................................................................................................................................................................ 37 PROFESSIONAL JUDGMENT................................................................................................................................................................................................................................ 37 SIMPLIFIED NEEDS TEST ..................................................................................................................................................................................................................................... 40 FAFSA SIMPLIFICATION....................................................................................................................................................................................................................................... 40 EXPECTED FAMILY CONTRIBUTION ................................................................................................................................................................................................................ 40 INDEPENDENT STUDENT..................................................................................................................................................................................................................................... 41 OTHER FINANCIAL ASSISTANCE....................................................................................................................................................................................................................... 41

TITLE IV STUDENT ASSISTANCE - PART D – FEDERAL DIRECT STUDENT LOAN ........................................................................ 41

Note: This summary is intended for informational purposes only. Refer to the bill for specific information. of 103 TITLE I GENERAL PROVISIONS - PART C – COST OF HIGHER EDUCATION.................................................................................. 81

Draft – OGSLP Last Updated June 19, 2009

FEDERAL DIRECT STUDENT LOAN PROVISIONS........................................................................................................................................................................................... 41

TITLE IV STUDENT ASSISTANCE - PART G – GENERAL PROVISIONS ........................................................................................... 44 FORMS...................................................................................................................................................................................................................................................................... 45 SPECIAL CIRCUMSTANCES ................................................................................................................................................................................................................................. 47 ABILITY TO BENEFIT ............................................................................................................................................................................................................................................ 48 DISTANCE EDUCATION........................................................................................................................................................................................................................................ 48 INCOME DATA FROM IRS .................................................................................................................................................................................................................................... 49 SUSPENSION OF ELIGIBILTY .............................................................................................................................................................................................................................. 49 STUDENTS WITH INTELLECTUAL DISABILITIES........................................................................................................................................................................................... 49 READMISSION REQUIREMENTS......................................................................................................................................................................................................................... 50 SCHOOL INFORMATION TO STUDENTS ........................................................................................................................................................................................................... 51 EXIT COUNSELING ................................................................................................................................................................................................................................................ 53 TRANSFER OF CREDIT.......................................................................................................................................................................................................................................... 55 NOTICE TO STUDENTS ......................................................................................................................................................................................................................................... 56 ENTRANCE COUNSELING.................................................................................................................................................................................................................................... 56 NSLDS DISCLOSURES ........................................................................................................................................................................................................................................... 58 TRUTH IN LENDING DISCLOSURE..................................................................................................................................................................................................................... 58 90-10 RULE............................................................................................................................................................................................................................................................... 59 SCHOOL CODE OF CONDUCT.............................................................................................................................................................................................................................. 62 PREFERRED LENDER ARRANGEMENTS........................................................................................................................................................................................................... 66 EXPERIMENTAL SITES ......................................................................................................................................................................................................................................... 77

TITLE IV STUDENT ASSISTANCE - PART H -PROGRAM INTEGRITY ............................................................................................... 78 TEACH OUT ............................................................................................................................................................................................................................................................. 78

TITLE IV STUDENT ASSISTANCE - PART I -COMPETITIVE LOAN AUCTION PILOT PROGRAM.................................................... 78 COMPETITIVE LOAN AUCTION PILOT PROGRAM ......................................................................................................................................................................................... 78

TITLE I GENERAL PROVISIONS - PART A - DEFINITIONS................................................................................................................. 80 INSTITUTION OF HIGHER EDUCATION ............................................................................................................................................................................................................ 80 PROPRIETARY SCHOOL ....................................................................................................................................................................................................................................... 80 POST SECONDARY VOCATIONAL INSTITUTION............................................................................................................................................................................................ 81


COLLEGE NAVIGATOR WEBSITE....................................................................................................................................................................................................................... 81 COST OF ATTENDANCE........................................................................................................................................................................................................................................ 86 NET PRICE................................................................................................................................................................................................................................................................ 86 TUITION AND FEES................................................................................................................................................................................................................................................ 86 CALCULATIONS - NET PRICE AND TUITION AND FEES ............................................................................................................................................................................... 86 SCHOOL REPORT TO ED....................................................................................................................................................................................................................................... 87 IN-STATE TUITION................................................................................................................................................................................................................................................. 87 MAINTENANCE OF EFFORT................................................................................................................................................................................................................................. 88

TITLE I GENERAL PROVISIONS - PART D – ADMINISTRATIVE PROVISIONS FOR DELIVERY OF STUDENT FINANCIAL ASSISTANCE.......................................................................................................................................................................................... 88

ANNUAL SCHOOL CERTIFICATION................................................................................................................................................................................................................... 88

TITLE X – PRIVATE STUDENT LOAN IMPROVEMENT........................................................................................................................ 89 PRIVATE STUDENT LOAN TRANSPARENCY AND IMPROVEMENT ACT OF 2008.................................................................................................................................... 89


Item # Subject

[Includes HEOA and HEA section

citations]

The Higher Education Opportunity Act

*Effective Date

Comments Guidance and Sources

Title IV Student Assistance - Part A - Grants

PELL GRANTS

1

Pell Grants –Maximum Award Bill Section: 401 HEA Section: 401(b)(2)(A)

Maximum annual limits for the Pell Grant Program is increased by HEOA as follows:

$6,000 for AY 2009-2010 $6,400 for AY 2010-2011 $6,800 for AY 2011-2012 $7,200 for AY 2012-2013 $7,600 for AY 2013-2014 $8,000 for AY 2014-2015

Begins Academic Year

2009-2010

The College Cost Reduction and Access Act (CCRAA) implemented mandatory increases to the Pell Grant Program maximum annual limits as provided below:

$4,800 for AY 2008-2009 $4,800 for AY 2009-2010

(increase of $490)

$5,000 for AY 2010-2011 $5,000 for AY 2011-2012

(increase of $690) $5,400 for AY 2012-2013

(increase of $1,090) If appropriations are sufficient, the maximum Pell Grant awards could be the HEOA maximum amount plus the CCRAA increase amount. Example: For AY 2010-2011 maximum HEOA Pell Grant award amount is $6,400 plus the increase of $690 from CCRAA equals a maximum grant amount of $7,090. (HEOA+CCRAA= Maximum Pell Grant Amount)

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 103)

2

Pell Grants – Minimum Award Bill Section: 401 HEA Section: 401(b)(2)(C)

The $400 minimum annual Pell Grant is eliminated. The Pell Grant minimum award is calculated at 10% of the “appropriated” maximum award. No student shall be awarded a Pell Grant that is less than 10% of the maximum basic grant level for a single academic year, provided for via appropriations.

If the calculated Pell Grant award amount is

July 1, 2009 The minimum award is based on the HEOA appropriated maximum award which does not include the CCRAA mandatory add-on. Example: AY 2010-2011 the maximum HEOA is $6,400 and the CCRAA mandatory add-on is $690 giving a zero EFC student a Pell Grant maximum award of $7,090. For a student who qualifies only


http://www.ifap.ed.gov/dpcletters/GEN0812FP0810.html



Item # Subject


citations]


*Effective Date


equal to or greater than 5% but less than 10% of the basic level, the student shall be awarded 10%.

If the amount is less that 5%, then no award is made.

for the minimum Pell Grant award, the student will receive 10% of the appropriated maximum award which is $640.

3

Pell Grants - Year Around Bill Section: 401 HEA Section: 401(b)(5)(A)

The new law eliminates the case-by-case basis, provided for, in prior law, and provides that a student may receive not more than two Pell grants during a single award year to allow the student to progress toward a degree or certificate program. The student must be enrolled at least half-time for a period of more than one academic year, or more than two semesters or an equivalent period of time, during a single award year; AND be enrolled in a program which leads to an associate, or baccalaureate degree or certificate. Total amount awarded to such a student may exceed the maximum basic grant level specified in the Appropriations Act.

July 1, 2009 DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 103-104)

4

Pell Grants - Maximum Duration of Eligibility Bill Section: 401 HEA Section: 401(c )(5)

Current law allows a student to receive a Pell Grant until completion of his or her first undergraduate baccalaureate degree. The HEOA provision limits the student’s eligibility to 18 semesters, or equivalent.

August 14, 2008 (but applies to students who

receive a Federal Pell Grant for the first time on or

after July 1, 2008)

NSLDS will track maximum duration. The regulations are to provide fractional equivalents for terms in which a student is enrolled less than full-time. As a result, a student is eligible to receive up to nine Federal Pell Grant Scheduled Awards.

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 105-105)

Title IV Student Assistance - Part B – Federal Family Education Loan Program (FFELP)






Item # Subject


citations]


*Effective Date


ESTIMATED FINANCIAL ASSISTANCE

5

Estimated Financial Assistance Calculations Bill Section: 422(a) HEA Section: 428(a)(2)

HEOA redefines estimated financial assistance to exclude all veterans’ education benefits as defined in Section 480(c) of the Higher Education Act. The specific benefits now excluded are as follows:

United States Code, title 10, chapter 2: Reserve Officer Training Corps scholarship

United States Code, title 10, chapter 106: Selective Reserve

United States Code, title 10, chapter 107: Selective Reserve Educational Assistance Program

United States Code, title 37, chapter 2: Reserve Officer Training Corps Program

United States Code, title 38, chapter 30: Montgomery GI Bill—active duty

United States Code, title 38, chapter 31: vocational rehabilitation

United States Code, title 38, chapter 32: Post-Vietnam Era Veterans’ Educational Assistance Program

United States Code, title 38, chapter 35: Dependents Educational Assistance Program

Public Law 97–376, Section 156: Restored Entitlement Program for Survivors (or Quayle benefits)

Public Law 96–342, Section 903: Educational Assistance Pilot Program

For FFEL and DL eligibility

determinations made on or after

July 1, 2010

Prior to this change only certain veterans’ education benefits were excluded (only those under paragraph (2)(E) of Section 480(c) were excluded). Now all benefits under Section 480(c) are excluded. National service education awards and post-service benefits under Title I of the National and Community Service Act of 1990 were already excluded prior to this change.


DEFERMENTS

Confirmation of In-School Deferment through

HEOA adds a new condition, if requested by the school; the lender shall determine a borrower’s eligibility for an in-school deferment based on confirmation of the

For deferments granted on or after August 14, 2008

DCL GEN-08-12/ FP-08-10: Contains information on






Item # Subject


citations]


*Effective Date


6

NSLDS Bill Section: 422(c )(1) HEA Section: 428(b)(1)(Y)(i)

borrower’s half-time enrollment status through NSLDS. The other conditions that allow a lender to determine the borrower’s eligibility for an in-school deferment are as follows:

documentation from the borrower new loan certification that determines eligibility student status information

changes made to the HEA by enactment of the HEOA - (DCL page 133)

7

Deferment - Disclosure of Interest Capitalization Bill Section: 422(c )(1) HEA Section: 428(b)(1)(Y)(iii)

A lender, shall at the time it grants an in-school, graduate fellowship, unemployment, military or economic hardship deferment (deferments to new borrowers on or after 7/1/93) on an unsubsidized Stafford loan, provide information to help a borrower understand the impact of interest capitalization both on the principal amount and with regard to interest paid over the life of the loan.

For deferments granted on or after August 14, 2008

Lenders are not precluded from building this disclosure into existing processes at the time the deferment is requested


LOAN TRANSFER OR SALE

8

Loan Transfer or Sale Notification Notice Bill Section: 422(c )(2) HEA Section: 428(b)(2)(F)(i)

In cases where a loan transfer or sale changes the identity of the party with whom the borrower needs to communicate or send payments, both the transferor and transferee (notification can be joint) must now, in addition to current requirements, notify the borrower of:

the effective date of the transfer, the date the current servicer will stop accepting

payments (as known on the date of such notice), and

the date the new servicer will begin accepting payments

For any required notification to a borrower on or

after August 14, 2008


GUARANTOR PROHIBITED INDUCEMENTS




Item # Subject


citations]


*Effective Date


9

Guarantor Prohibited Inducements - Restrictions on Payments, Mailings, and Advertising Bill Section: 422(d) HEA Section: 428(b)(3)

In addition to the current restrictions on premiums, payments and other inducements, new prohibited inducement provisions applicable to guarantors are added by HEOA.

Additionally guarantors are prohibited from offering directly or indirectly, stock or other securities, prizes, travel, entertainment expenses, and tuition payment or reimbursement to any school or school employee in order to secure FFELP loan applications or to any lender, or an agent or employee of the lender, in order to secure the designation of the guarantor as the insurer of a FFELP loan. It also removes the exception for inducements to lenders for Unsubsidized Stafford loans, leaving only an exception for lender-of –last-resort (LLR) loans.

Revises the prohibition against unsolicited mailings of loan applications by guarantors to also include by electronic means.

Adds new prohibitions against the guarantor performing any function, or paying another person to perform any function, that a school is required to perform (other than required exit counseling).

Adds additional prohibitions regarding a guarantor conducting fraudulent or misleading advertising concerning loan availability, terms or conditions. The prohibition was expanded to include “terms or conditions.”

Revised the assistance guarantors may provide to schools by adding the word “technical” to assistance comparable to the kinds of “technical” assistance provided to schools by the Department.

Guaranty agency and lender activities

undertaken on or after

August 14, 2008

Current regulations prohibit: • Payments or offerings of other

benefits • including prizes or additional

financial aid funds to 1) a prospective borrower in exchange for processing a loan using the agency’s loan guarantee or 2) a school or school-affiliated organization based on the school’s or organization’s voluntary or coerced agreement to use the guaranty agency for processing loans, or to provide a specified volume of loans using the agency’s loan guarantee.

• Mailing or distributing unsolicited loan applications to students or to parents, unless the potential borrower has previously received loans insured by the guaranty agency.

• Staffing services to a school, except for services provided to participating foreign schools at the direction of ED, as a third-party servicer or otherwise on more than a short-term, emergency basis, which is non-recurring, to assist the institution with financial aid-related functions.

• Fraudulent or misleading advertising concerning loan availability.


INCOME-BASED REPAYMENT PLAN

Income-Based Income-Based Repayment (IBR) plan is added to the list August 14, 2008, DCL GEN-08-12/


Item # Subject


citations]


*Effective Date


10

Repayment Plan Bill Section: 422(e) HEA Section: 428(b)(9)(A)

of repayment plans that a lender must offer to a FFELP borrower and the borrower may chose. Borrowers who have FFELP loans (other than a Parent PLUS loan or a Consolidation Loan that discharged the liability of Parent PLUS loans) and who have a partial financial hardship may repay the balance of their loans under an income-based repayment plan.

for the July 1, 2009

implementation of IBR

FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 119) DCL-FP-09-03: This letter provides updated guidance to FFEL Program loan holders concerning the completion and return of Loan Verification Certificates in connection with a borrower’s application to consolidate a single FFEL Program consolidation loan into a new Federal Direct Consolidation loan. 6/12/2009 Electronic Announcement: Income Documentation for the Income Based Repayment Plan - Until the new IRS electronic consent submission process is implemented or other guidance is issued by the Department, FFEL lenders may, at their option, use the procedures in this announcement.

11

Income-Based Repayment Plan Bill Section: 422(e)(2) HEA Section: 428(b)(1)(L)(i)

HEOA adds exception to the $600 annual payment requirement for the Income-Based Repayment (IBR) plan.

August 14, 2008, for the

July 1, 2009 implementation of

IBR

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 119) 6/12/2009 Electronic Announcement: Income Documentation for the Income Based

http://www.ifap.ed.gov/dpcletters/FP0903.html

http://www.ifap.ed.gov/eannouncements/061209IncomeDocIncomeBasedRepymtPlan.html





Item # Subject


citations]


*Effective Date


Repayment Plan - Until the new IRS electronic consent submission process is implemented or other guidance is issued by the Department, FFEL lenders may, at their option, use the procedures in this announcement.

12

Income-Based Repayment Plan Bill Section: 494F HEA Section: 493C

This section is amended by HEOA so that the Income-Based Repayment (IBR) plan option is not eligible for loans currently in default. However, loans that are in default aversion or have been successfully rehabilitated are eligible for the IBR plan.


July 1, 2009 implementation of

IBR

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 119) 6/12/2009 Electronic Announcement: Income Documentation for the Income Based Repayment Plan - Until the new IRS electronic consent submission process is implemented or other guidance is issued by the Department, FFEL lenders may, at their option, use the procedures in this announcement.

FORBEARANCE

13

Lender Forbearance Notification Requirements specified in Guaranty Agreements Bill Section: 422(f) HEA Section: 428(c)(3)(D)(iii)

HEOA adds new lender requirements regarding forbearance notifications to the borrower: • At the time the lender grants a forbearance, the

lender is to provide information on the impact of capitalization of interest on the principal balance and the total amount of interest to be paid on the loan, and

• Every 180 days during the forbearance, the lender is to contact the borrower with information on the following:

For forbearances granted on or after August 14, 2008





Item # Subject


citations]


*Effective Date


o The amount of principal and interest that has accrued since the last statement,

o The fact that interest will accrue during the forbearance period, and

o The amount of interest that will be capitalized and the dates of such capitalization, and

o Provide a notice that the borrower can pay interest before it is capitalized, and

o That the forbearance can be terminated at any time (not a new requirement)

SERVICEMEMBERS CIVIL RELIEF ACT

14

Servicemembers Civil Relief Act - FFELP Reduction in Interest Bill Section: 422(g)(1) HEA Section: 428(d)(1)

HEOA revises the statute to state that Section 207 of the Servicemembers Civil Relief Act (SCRA) now applies to FFELP loans (including eligible borrowers with loans in default). Eligible service members, upon request, will have the “interest” on their eligible FFELP loans capped at 6%. The 6% limit applies to fees and other charges. The SCRA states that the term "interest" includes service charges, renewal charges, fees, or any other charges (except bona fide insurance) with respect to an obligation or liability. Eligible loans include those obtained by the borrower or jointly by the borrower and his or her spouse under the following conditions:

Loan must be disbursed prior to the date that the servicemember was called to active duty military service

Borrower must provide written notice and copy of orders

Covered servicemembers include:

full-time active duty members of the Armed Forces (Army Navy, Air Force, Marine Corps, and Coast Guard) under 10 U.S.C. 101(d)(1)

commissioned members of the National

August 14, 2008

(applies to borrowers in

military service as of August 14,

2008, who present written requests on

or after August 14, 2008)

Per Section 207 of the Servicemembers Civil Relief Act, the servicemember must request this reduction in writing; include a copy of his/her orders; and this must be provided to the holder of the loan no later than 180 days after the date of the servicemember’s termination or release from military service. The 6% cap is applicable to subsidized and unsubsidized Stafford, PLUS, and Consolidation loans. ED advises that endorsers are only eligible for the 6% interest rate limitation if they themselves qualify as an eligible service member under the SCRA. Endorsers who do not qualify can be billed at the applicable statutory interest rate. Per U.S.C. 101(a)(5), this rate reduction is applicable to members of the Reserve only if they are on active duty. If a borrower’s military orders are open-ended, the following Website can be utilized to track continued eligibility



Item # Subject


citations]


*Effective Date


Oceanographic and Atmospheric Administration (NOAA) and Public Health Service

members of the National Guard, who are called to active duty for a period of more than 30 consecutive days, for purposes of responding to a national emergency (32 U.S.C. 502(f)) declared by the President or the Secretary of Defense and supported by federal funds

Request for reduced rate must be made no later than 180 days after end of applicable military service.

through this Website: https://www.dmdc.osd.mil/scra/owa/home 10 U.S.C. 101(d)(1) - The term “active duty” means full-time duty in the active military service of the United States. Such term includes full-time training duty, annual training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned. Such term does not include full-time National Guard duty. 32 U.S.C. 502(f) – (1) Under regulations to be prescribed by the Secretary of the Army or Secretary of the Air Force, as the case may be, a member of the National Guard may—

(A) without his consent, but with the pay and allowances provided by law; or (B) with his consent, either with or without pay and allowances; be ordered to perform training or other duty in addition to that prescribed under subsection (a)

(2) The training or duty ordered to be performed under paragraph (1) may include the following:

(A) Support of operations or missions undertaken by the member’s unit at the request of the President or Secretary of Defense. (B) Support of training operations and training missions assigned in whole or in part to the National Guard by the Secretary concerned, but only to the extent that such training missions and training operations— (i) are performed in the United


Item # Subject


citations]


*Effective Date


States or the Commonwealth of Puerto Rico or possessions of the United States; and (ii) are only to instruct active duty military, foreign military (under the same authorities and restrictions applicable to active duty troops), Department of Defense contractor personnel, or Department of Defense civilian employees

(3) Duty without pay shall be considered for all purposes as if it were duty with pay.

15

Servicemembers Civil Relief Act - FFELP Special Allowance Bill Section: 422(g)(2) HEA Section: 438(g)

For FFELP loans, the 6% reduced interest rate for eligible servicemembers shall be used as the applicable interest rate in calculating special allowance.

Loans first disbursed on or

after July 1, 2008

For loans disbursed prior to July 1, 2008 that have applicable (statutory rates) above 6%, the lender will lose any special allowance payments applicable to the interest rate over 6% and will be required to remit Excess Interest Rebates applicable to the interest rate over 6%.


DUPLICATIVE NOTICE REQUIREMENT

16

Repeal of Duplicative Notice Requirement Bill Section: 422(h) HEA Section: 428(e)

HEOA removes duplicative requirement for lenders to disclose to borrowers the availability of the income-sensitive repayment option because there are more general disclosures that lenders are required that contain the same requirement.

GUARANTOR INFORMATION ON DEFAULTS

17

Guarantor - Information on Defaults Bill Section: 422(i) HEA Section: 428(k)

A guaranty agency that receives a default claim is required on at least two occasions to notify the borrower of the options available to remove the loan from default, and the fees and conditions involved.

FFEL lender default claims received by a

guaranty agency on or after

August 14, 2008







Item # Subject


citations]


*Effective Date


PLUS LOANS

18

PLUS Loans - Applicant Credit Review Bill Section: 424(a)(1) HEA Section: 428B(a)(3)(B)(i)

HEOA corrects the specific criteria for extenuating circumstance. No 90- plus day delinquencies on debts, other than mortgage loan or medical bill payments, as stipulated in the Ensuring Continued Access to Student Loans Act (ECASLA). For debts other than a mortgage loan or medical bill, adverse credit reverts back to the regulatory requirements that were in place prior to ECASLA: 90 days or more delinquent on the repayment of any

debt Debt discharged in bankruptcy during the 5-year

period before the date of the credit report Applicant has been the subject of a default

determination on any debt, foreclosure, tax lien, repossession, wage garnishment, or a write-off of a Title IV debt during the 5-year period before the date of the credit report.

FFEL and DL PLUS loans that

were first disbursed on or

after July 1, 2008, for special extenuating

circumstances that exist between

January 1, 2007 and December 31,

2009

For mortgage loans and medical bills, the 180 days extenuating circumstance is still in place for the period of January 1, 2007 through December 31, 2009.


19

PLUS Loans - Repayment Start Date Bill Section: 424(a)(2) HEA Section: 428B(d)(1)

This provision takes the rule back to the way it was prior to the passage of Ensuring Continued Access to Student Loans Act (ECASLA). Eliminates the optional “deferred repayment start date” on parent PLUS loans (established by the ECASLA) and stipulates that repayment of principal will always begin within 60 days of the final disbursement date.

FFEL and DL PLUS loans for which the first

disbursement of the loan was made

on or after July 1, 2008


20

PLUS Loans - Borrower Deferment Eligibility Bill Section: 424(a)(2) HEA Section: 428B(d)(1)(A)(i)

PLUS loan deferment for both parent PLUS and Grad PLUS loans first disbursed on or after 7/1/2008. Both the parent PLUS loan and the Grad PLUS loan borrower can defer their loan indefinitely, based on their own enrollment in an eligible school on at least a half-time basis. The deferment applies to all loans disbursed on or after




10/30/2008 – per Pam Moran with ED, ED’s interpretation is that this deferment and the post-enrollment deferment are loan- specific and not borrower- specific. There is no change in regards to the other deferment types that are cross-referenced (graduate fellowship program, rehabilitation training program, qualifying National Guard duty, unemployment, and economic hardship








Note: This summary is intended for i rposes only. Refer to the bill for specific information.Draft – OGSLP Last Updated June 19, 2009

nformational pu of 103

Item # Subject


citations]


*Effective Date


July 1, 2008 regardless of the previous “new borrower” category applicable to the borrower for deferments on prior loans. This deferment is loan specific and not borrower specific.

deferment). The time-limited deferment types continue to be borrower-specific. ED also states that for lenders, in reviewing information to determine eligibility for PLUS loan deferment, it is acceptable to use NSLDS. However, the parent PLUS loan borrower needs to initiate the request for deferment or post-enrollment deferment based on the dependent student.

21

Parent PLUS Loans – Dependent Student Deferment Eligibility Bill Section: 424(a)(2) HEA Section: 428B(d)(1)(A)(ii)

New deferment eligibility for parent PLUS loans. Stipulates that parent PLUS loan borrowers can defer their loan, upon request, while the student for whom they acquired the loan is enrolled in an eligible school on at least a half-time basis. The deferment applies to all loans disbursed on or after July 1, 2008 regardless of the previous “new borrower” category applicable to the borrower for deferments on prior loans. This deferment is loan specific and not borrower specific.





22

Parent PLUS Loans – Dependent Student - Post-Enrollment Deferment Period Bill Section: 424(a)(2) HEA Section: 428B(d)(1)(B)(i)(I)

New post-enrollment deferment period for parent PLUS loan borrowers. Stipulates that the parent PLUS borrower can, upon request, defer his/her loan for the six-month period immediately following the date on which the student for whom the borrower acquired the loan ceased to be enrolled at an eligible school on at least a half-time basis. The deferment applies to all loans disbursed on or after July 1, 2008 regardless of the previous “new borrower” category applicable to the borrower for deferments on prior loans. This deferment is loan specific and not borrower specific.




The borrower must request this deferment. DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 120)

Parent PLUS Loans – Borrower Post-Enrollment

New post-enrollment deferment period for parent PLUS loans. Stipulates that the parent PLUS loan borrower can, upon request, defer his/her loan for the six-month period immediately following the date on which the borrower



The borrower must request this deferment separately; it cannot be assumed based on the borrower’s earlier request for an in-school deferment.

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA -


Item # Subject


citations]


*Effective Date


23

Deferment Period Bill Section: 424(a)(2) HEA Section: 428B(d)(1) (B)(i)(II)

ceased to be enrolled at an eligible school on at least a half-time basis. The deferment applies to all loans disbursed on or after July 1, 2008 regardless of the previous “new borrower” category applicable to the borrower for deferments on prior loans. This deferment is loan specific and not borrower specific.


Can be applied after each continuous enrollment period; is not confined to the first such period.

(DCL page 120)

24

Graduate and Professional PLUS Loans – Post-Enrollment Deferment Period Bill Section: 424(a)(2) HEA Section: 428B(d)(1)(B)(ii)

New deferment period for Grad PLUS loans. Stipulates that the Grad PLUS loan borrower can defer his/her loan for the six-month period immediately following the date on which the borrower ceased to be enrolled at an eligible school on at least a half-time basis. The deferment applies to all loans disbursed on or after July 1, 2008 regardless of the previous “new borrower” category applicable to the borrower for deferments on prior loans. This deferment is loan specific and not borrower specific.




There is no language in the law that requires the Grad PLUS loan borrower to request this deferment separately. If the Grad PLUS loan borrower has a Grad PLUS loan eligible for this new deferment and an old Grad PLUS loan that is not eligible, lenders have the option to align repayment start dates through a discretionary forbearance.


25

PLUS Loans - Capitalization of Interest Bill Section: 424(a)(2) HEA Section: 428B(d)(2) (A)

HEOA stipulates that the interest accrued during any of the deferment periods for the in-school deferment and the post-enrollment deferment periods must, upon agreement by the borrower and lender, be paid monthly or quarterly, or be capitalized by the lender no more frequently than quarterly, as was current practice prior to passage of the Ensuring Continued Access to Student Loans Act (ECASLA).





26

PLUS Loans - Capitalization of Interest Bill Section: 424(a)(2) HEA Section: 428B(d)(2) (B)

HEOA stipulates that, by capitalizing interest, lenders are not causing any of the annual insurable loan limits for the borrower to be exceeded.




No change to existing practice. DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 121)

27

PLUS Loans - Repayment Period Start Date Bill Section: 424(b)

HEOA stipulates that the repayment period on all federal PLUS loans will once again begin on the disbursement date or, in the event of multiple disbursements, on the final disbursement date. This stipulation had been eliminated by the Ensuring Continued Access to Student



Restores the provision in 34 CFR 682.205(c )(1) requiring the lender to disclose the repayment information “at or prior to the beginning of the repayment period”, for lenders who may have suspended the



Item # Subject


citations]


*Effective Date


HEA Section: 428(b)(7)(C)

Loans Act (ECASLA). Also restores provision that any deferment or forbearance time is excluded from the repayment period.


production of this disclosure in order to accommodate the deferred repayment requirements of the ECASLA.

(DCL page 121)

CONSOLIDATION LOANS

28

Consolidation Loans – Military Borrowers Bill Section: 425(a) HEA Section: 428C(a)(3)(B)(i)(V)

HEOA allows an eligible military borrower to re-consolidate a FFELP Consolidation loan into the Direct Loan Program for purposes of using the new “no accrual of interest” benefit for active duty service members. Requires the Department to make a Direct Consolidation loan for this purpose. The zero-interest benefit under FDLP is only applicable to FDLP loans first disbursed on our after 10/1/2008, or in the case of a consolidation loan, only for that portion of the consolidation loan that repaid a FDLP loan first disbursed on or after 10/1/2008. This is for a period of not more than 60 months. An eligible military borrower is an individual who— • is serving on active duty during a war or other

military operation or national emergency; or • is performing qualifying National Guard duty

during a war or other military operation or national emergency; and is serving in an area of hostilities in which service qualifies for special pay under 37 U.S.C. 310.

FFEL Consolidation:

Direct Consolidation

loan, or portion of a Direct

Consolidation loan, first

disbursed on or after

October 1, 2008

DL Consolidation: Direct Loans first disbursed on or

after October 1, 2008, and any portion of

a Direct Consolidation loan that repaid a Direct

Loan first disbursed on or

after October 1, 2008

In clarification received from ED for the “no accrual of interest” benefit for active duty service members, a borrower may consolidate his or her FFELP loans first disbursed on or after October 1, 2008 (including Federal Consolidation Loans that repaid FFELP or Direct Loan Program loans first disbursed on or after October 1, 2008) into the Direct Loan Program to take advantage of the no accrual of interest benefit for active duty service members. No interest will be charged on the portion of the borrower’s Direct Consolidation Loan that repaid FFELP or Direct Loan Program loans first disbursed on or after October 1, 2008 during periods of qualifying active duty military service (for up to 60 months). Per DCL FP-09-03 - Statutory changes made to section 428C(a)(3) of the HEA by the CCRAA and the HEOA allow a borrower to consolidate a single FFEL Program consolidation loan into the Direct Loan Program if:

The FFEL consolidation loan has been submitted for default aversion or is already in default and the borrower wishes to obtain, effective July 1, 2009, an Income-Based Repayment plan on the Direct Consolidation Loan;

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 135 and 138) DCL FP-09-03 - This letter provides updated guidance to FFEL Program loan holders concerning the completion and return of Loan Verification Certificates in connection with a borrower’s application to consolidate a single FFEL Program consolidation loan into a new Federal Direct Consolidation loan.

http://www.ifap.ed.gov/dpcletters/FP0903.html


Item # Subject


citations]


*Effective Date


The borrower wishes to use the Direct Loan Program's Public Service Loan Forgiveness Program under section 455(m) of the HEA (effective July 1, 2008); or

The borrower wishes to take advantage of the Direct Loan Program's no interest accrual benefit for active duty service members under section 455(o) of the HEA and the FFEL Program consolidation loan is one that repaid FFEL Program loans that were first disbursed on or after October 1, 2008.

29

Consolidation Loans – Disclosure Bill Section: 425(b) HEA Section: 428C(b)(1) (F)

HEOA requires a FFELP lender to disclose, in simple and understandable terms, at the time the lender provides a consolidation loan application:

whether consolidation would result in a loss of benefits under the FFEL or Direct Loans (e.g., loan forgiveness, cancellation, deferment), or under Perkins (e.g., interest-free periods, deferment, cancellation), including a list of occupations that qualify for forgiveness under Perkins

available repayment plans, options to prepay (e.g., shorter schedule, change

repayment plans), that benefit programs may vary among lenders, the consequences of default, that the submission of an application does not

obligate the borrower to take the loan

FFEL Consolidation applications provided to

potential borrowers on or



Consolidation Loans - Repayment Plans Bill Section: 425(d) HEA Section: 428C(c ) (2) (A) and

HEOA requires a FFELP Consolidation lender to offer a consolidation borrower an income-based repayment plan, except for a Consolidation loan that repays any FFELP or Direct parent PLUS loan. • Exempts Consolidation loans repaid under

income-based repayment from the repayment


July 1, 2009, implementation

of IBR



Item # Subject


citations]


*Effective Date


30 428C(c )(3)(C )

period lengths based on borrower’s education loan balance if the terms of the income-based repayment plan conflicts.

• Exempts Consolidation loans repaid under an income-based repayment plan from the minimum payment of no less than the accrued unpaid interest.

REHABILITATION

31

Rehabilitation - Removal of Default Record Bill Section: 426(l) HEA Section: 428F(a)

HEOA clarifies that when a guaranty agency rehabilitates and sells a loan to a lender that the guaranty agency must remove the record of default from the borrower’s credit history.

Applies to all loan rehabilitation sales to eligible lenders that take place on

or after August 14, 2008, and to all prior holders of the rehabilitated

defaulted loan


32

Rehabilitation - Limitations Bill Section: 426(l) HEA Section: 428F(a)

A borrower can only rehabilitate once.

Limitation applies to any defaulted

loan that is rehabilitated on or


This limitation is loan-based, not borrower- based. Allows rehabilitation for a borrower with previously rehabilitated defaulted loans if the borrower was in a rehabilitation program on or before August 14, 2008. The Higher Education Opportunity Act (HEOA) provision limits a FFEL and Direct Loan borrower to loan rehabilitation only one time per defaulted loan. Initial guidance from ED suggested that a borrower had to have been in a rehabilitation program prior to the HEOA effective date of August 14, 2008, in order to rehabilitate any loans that had been previously rehabilitated and subsequently defaulted. The guidance in the December 2008 HEOA DCL appeared to limit the restriction to borrowers who rehabilitate defaulted loans on or after August 14, 2008, and subsequently default on those loans. The student loan industry questioned the guidance and NCHELP received



Item # Subject


citations]


*Effective Date


confirmation from ED regarding the impact to borrowers. Per ED, this new restriction impacts only borrowers who rehabilitate defaulted loans on or after August 14, 2008. A borrower’s loans included in any rehabilitation on or after August 14, 2008, are not eligible to be included in a future rehabilitation. The triggering event is the borrower’s attempt to rehabilitate a second or subsequent time for loans that were rehabilitated on or after August 14, 2008.

33

Rehabilitation - Financial and Economic Literacy Bill Section: 426(2) HEA Section: 428F(c )

HEOA requires a guaranty agency to provide financial and economic educational materials to borrowers that rehabilitate their loans.

Guaranty agencies must provide these

educational materials to each

borrower who successfully

rehabilitates a defaulted loan with

the agency on or after

August 14, 2008

Per DCL GEN-08-12/FP-08-10, the guaranty agency should make the same materials generally available to all other borrowers who have rehabilitated loans previously with the agency.


UNSUBSIDIZED STAFFORD LOANS

34

Unsubsidized Stafford Loan Limits: Teacher Certification and Graduate and Professional Programs Bill Section: 428 HEA Section: 428H(d)

This is a post Ensuring Continued Access to Student Loans Act (ECASLA) technical correction regarding the unsubsidized Stafford annual loan limits for students pursuing coursework necessary for enrollment in a graduate or professional program and students pursuing a teacher certification. Independent undergraduate students pursuing coursework necessary for enrollment in an undergraduate degree or certificate program are eligible for the increased loan limit of $6,000. Students enrolled in coursework necessary for enrollment in a graduate or professional program, or students enrolled in a program that is necessary to attain a professional credential or certification to become a teacher, continue to be eligible for the

Loans first disbursed on or

after July 1, 2008



Item # Subject


citations]


*Effective Date


loan limit of $7,000 for which they were eligible prior to the enactment of Ensuring Continued Access to Student Loans Act (ECASLA).

TEACHER LOAN FORGIVENESS

35

Teacher Loan Forgiveness - Teachers Employed by Educational Service Agencies Bill Section: 429 HEA Section: 428J

HEOA amends the existing FFEL Teacher Loan Forgiveness program as follows: allows a teacher to have been employed in a

qualifying location as well as a school special education teachers may now also qualify if

they are employed by an educational service agency Also added prevention of double benefits for the same service. A borrower may not receive this benefit and a benefit under the following programs:

the new loan forgiveness for service in areas of national need (428K)

DL public service loan forgiveness (455(m) DL teacher loan forgiveness (460), or subtitle D of title I of

the National Community Service Act of 1990

Teacher Loan Forgiveness and Teacher Loan Forgiveness Forbearance applications

received on or after

August 14, 2008


LOAN FORGIVENESS FOR SERVICE IN AREAS OF NATIONAL NEED

36

Loan Forgiveness - Child Care Providers Bill Section: 430 HEA Section: 428K

Deletes the prior program for Child Care Provider Loan Forgiveness and replaces it with the new Loan Forgiveness for Service in Areas of National Need.

Loan Forgiveness for Service in Areas of National Need Bill Section: 430 HEA Section: 428K

New loan forgiveness program for FFEL and DL Stafford, Grad PLUS, and Consolidation loan borrowers employed full-time in areas of national need, including: early childhood educators nurses foreign language specialists librarians teachers educating students who are limited English

proficient teachers serving in low-income communities and teachers in

underrepresented populations

School, academic, or calendar year of

full-time employment, in an

area of national need, that a borrower

completes on or after

August 14, 2008

Subject to appropriation by Congress, which means funds have to be approved by Congress before any forgiveness can occur. Defaulted borrowers, parent PLUS loans, and consolidations that paid off parent PLUS loans are not eligible. DCL GEN-08-12/FP-08-10, defines the following:

o Audiologist



Item # Subject


citations]


*Effective Date


37

child welfare workers speech-language pathologists and audiologists school counselors public safety workers emergency management workers emergency medical technicians public health workers public interest legal services nutritional specialists medical specialists mental health professionals dentists applied sciences, technology, engineering, or mathematics

employees physical therapists school superintendents, principals, or other administrators

in low-income areas occupational therapists

Loan forgiveness may be up to $2,000 a year, not to exceed five years of service for a total aggregate forgiveness amount of $10,000. Authorized to be appropriated by Congress for 2009 through 2014. Forgiveness is granted on a first-come, first-served basis, subject to the availability of funds. There are no refunds of any payments. A borrower may not receive forgiveness of loan obligations for the same service under this benefit and under the following programs:

FFEL teacher loan forgiveness (428J) Loan repayment for civil legal assistance attorneys

(428L) DL public service loan forgiveness (455(m), or DL teacher loan forgiveness (460)

o Early childhood educator o Eligible preschool program o Eligible early childhood

education program o Low-Income community o Nurse o Occupational therapist o Physical therapist o Speech-language pathologist

Pertinent sections of the Social Security Act can be found at - http://frwebgate.access.gpo.gov/cgibin/ getdoc.cgi?dbname=browse_usc&docid=Cite:+42USC1395x Pertinent sections of the Head Start Act can be found at - http://www.access.gpo.gov/uscode/title42/chapter105_subchapterii_.html The Public Service Health Act can be found at - http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=browse_usc&docid=Cite:+42USC296

LOAN REPAYMENT FOR CIVIL LEGAL ASSISTANCE ATTORNEYS


Item # Subject


citations]


*Effective Date


38

Loan Repayment for Civil Legal Assistance Attorneys Bill Section: 431 HEA Section: 428 L

HEOA creates a new forgiveness program to encourage qualified individuals to enter and continue employment as civil legal assistance attorneys by repaying a portion of their eligible loan(s). An eligible attorney must be a civil legal assistance attorney, continually licensed to practice law. The attorney must be a full-time employee of either:

a non-profit organization that provides free civil legal assistance to low-income individuals, or

a protection and advocacy system or client assistance program funded by a qualified federal program

Loan forgiveness may be up to $6,000 a year not to exceed $40,000. Authorized to be appropriated by Congress for 2009 through 2014. Distributed on a first-come first-served basis, with priority given to those who,

practiced for first 5 years, or less, as an attorney and has been spent 90% or more as a civil legal assistance attorney

received this benefit the previous year completed less than 3 years of their service

ED will make payments on behalf of the borrower directly to the loan holder for eligible FFEL and DL Stafford, Grad PLUS, Consolidations loans and Perkins loans.

August 14, 2008 Subject to appropriation by Congress, which means funds have to be approved by Congress before any forgiveness can occur. ED is authorized to make regulations. Defaulted loans, parent PLUS loans, and Consolidation loans that were used to pay off parent PLUS loans are ineligible. No double benefits for the same service. A borrower may not receive this benefit and a benefit under the following programs:

the new loan forgiveness for service in areas of national need (428K)

DL public service loan forgiveness (455(m)

Per DCL GEN-08-12/FP-08-10, a civil legal assistance attorney is defined as an attorney who is a full-time employee of:

a nonprofit organization that provides legal assistance with respect to civil matters to low-income individuals without a fee; or

a protection and advocacy system or client assistance program that provides legal assistance with respect to civil matters and receives funding under

o subtitle C of Title I of the Developmental Disabilities Assistance and Bill of Rights Act of 2000 (42 U.S.C. 15041 et seq.)

o section 112 or 509 of the Rehabilitation Act of 1973 (29 U.S.C. 732, 794e)

o Part A of Title I of the Protection and Advocacy for Individuals with Mental Illness Act (42 U.S.C. 10801 et seq.)

o section 5 of the Assistive Technology Act of 1998 (29



Item # Subject


citations]


*Effective Date


U.S.C. 3004); o section 1150 of the Social

Security Act (42 U.S.C. 1320b–21);

o section 1253 of the Public Health Service Act (42 U.S.C. 300d–53); or

o section 291 of the Help America Vote Act of 2002 (42 U.S.C. 15461);

as such employee, provides civil legal assistance as described in subparagraph (A) on a full-time basis; and

is continually licensed to practice law

39

Loan Repayment for Civil Legal Assistance Attorneys - Agreement with ED Bill Section: 431 HEA Section: 428 L

The borrower must enter into a written agreement with The U.S. Department of Education (ED). The borrower must agree to be employed for at least 3 years, unless involuntarily separated from that employment. If the borrower ends employment before the agreed upon term of employment, the borrower is involuntary separated from employment because of misconduct, or voluntarily resigns, the borrower must repay the payments made by ED. If the borrower is required and fails to repay, ED may recover the amount owed by any means allowable under the law. ED may waive the right to recover the amount owed by the borrower.

August 14, 2008 DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 116-118)

REPORTS TO CONSUMER REPORTING AGENCIES AND SCHOOLS

40

Reports to Consumer Reporting Agencies and Schools

HEOA replaces the term “credit bureaus” with “consumer reporting agencies” for reporting purposes throughout the HEA. Lenders, guarantors, and subsequent holders, in addition to current requirements, must report the following to all national credit bureaus:

Apply to all reports made to

consumer reporting agencies

on or after August 14, 2008

Per DCL GEN-08-12/FP-08-10, the kinds of information reported is also amended to include information concerning the repayment status of the loan for inclusion in the borrower’s file, provided no otherwise applicable provision of the Fair Credit Reporting Act (15 U.S.C. 1681 et



Item # Subject


citations]


*Effective Date


Bill Section: 432 HEA Section: 430A

FFEL loans as an “education loan” and the repayment status of a loan

seq.) is affected. The Fair Credit Reporting Act can be found at http://www.access.gpo.gov/uscode/title15/chapter41_subchapteriii_.html

LENDER REQUIRED DISCLOSURES

41

Lender Disclosure - Before Disbursement Bill Section: 434(a) HEA Section: 433(a)

HEOA revises the FFELP initial disclosure information sent at or before first disbursement of a Stafford and PLUS loan. The disclosure must now contain the additional new items listed below:

whether the amount of any charges, such as origination fee or federal default fee will be paid by the lender

statement that unsubsidized Stafford and graduate PLUS borrowers may pay interest while in school and, if not paid, the frequency of capitalization

statement that parent PLUS borrowers have the option to defer payment while the student is enrolled at least half-time, may pay interest while dependent student is in school and, if not paid, the frequency of capitalization

statement that parent PLUS borrowers may defer during a parent’s half-time enrollment in school

descriptions of repayment plans that are available for the loan

statement of circumstance in which the borrower may obtain forbearance

description of forgiveness options and requirements

explanation of any costs or fees the borrower may be charged, including late payment fees and collection costs that a borrower may incur during repayment or in collection

August 14, 2008 The following are the current disclosure requirements:

Disclosures may be in written or electronic format and may be part of federal loan materials, promissory note or other written form

Disclosures must contain: lender telephone number electronic address for additional

loan information (optional) a statement that the borrower

must repay the loan lender name address to send communication

and payment principal amount of loan amount of any charges, such as

origination fee or federal default fee, and whether the fee will be-

collected at or prior to disbursement

deducted from proceeds

paid separately by borrower

stated interest rate on PLUS loans

yearly and cumulative maximum amounts that may be borrowed

total cumulative balance, including the loan being applied



Item # Subject


citations]


*Effective Date


Also revises the disclosure of cumulative balance to include the “loan being disbursed to the borrower” instead of the “loan applied for by the student.” Clarification of loans that require disclosures.

for, owed by the student to the lender

an estimate of the projected monthly payment

when repayment is required when the borrower will be

obligated to pay interest that accrues on the loan

minimum and maximum repayment terms

minimum annual payment required by law

explanation of option for consolidation or refinancing

statement of right to prepay at any time without penalty

circumstance in which repayment of the loan or interest may be deferred

description of default consequences

description that a default will be reported to a consumer reporting agency

explanation of costs that a borrower may incur during repayment or in collection

42

Lender Disclosure - Before Repayment Bill Section: 434(b) HEA Section: 433(b)

HEOA revises the FFELP repayment disclosure information sent for repayment of a Stafford (subsidized and unsubsidized) and PLUS loan. Must be provided not less than 30 days nor more than 150 (currently 240 days) days before the first payment due date. The disclosure must now contain the additional new items listed below:

lender name or servicer, if applicable scheduled date on which repayment period will begin

or deferment end date for parent and graduate PLUS

August 14, 2008 The following are the current disclosure requirements:

Disclosures may be in written or electronic format

Disclosures must contain: lender telephone number electronic address for

additional loan information (optional)



Item # Subject


citations]


*Effective Date


loans that are deferred under the new PLUS deferments

estimated balance and interest to be capitalized, if applicable, as of the scheduled date on which the repayment period is to begin or deferment is to end for parent and graduate PLUS loans that are deferred under the new PLUS deferments

information on any loan repayment benefits, including:

o contingencies, such as rate reduction tied to automatic payroll or checking account deduction or making a specified number of payments, or other benefits that could reduce the amount of repayment or length of repayment period

o limitations, such as explicit information on reasons a borrower may lose eligibility, for a interest rate reduction, examples of the impact on repayment amount and length, the effect on the payoff amount and time for repayment (if requested by borrower), whether and how to regain eligibility if a benefit is lost

description of repayment plans available to the borrower and statement that the borrower may change plans during repayment

repayment schedule for all loans covered by the disclosure, based on a standard plan unless the borrower has selected another plan

any interest the borrower has already paid, unless, for PLUS and Unsubsidized Stafford loans, lender has provided projected monthly payment amounts previously

options to avoid or remove a default, including any fees

additional resources, including nonprofit organizations, advocates, and counselors (including ED Ombudsman) of which the lender is aware, where borrowers may receive advice and assistance on loan repayment

lender name address to send

communication and payment scheduled date on which

repayment period will begin estimated balance of loans

covered by the disclosure estimated interest to be

capitalized, if applicable, as of the scheduled date on which the repayment period is to begin

stated interest rate on the loan or loans, or the combined interest rate of loans with different stated interest rates

repayment schedule for all loans covered by the disclosure, including:

first payment due date

payment number, amount, and frequency

options and terms for loan consolidation or refinancing

projected total interest assuming payments made as scheduled

any fees that may be charged during the repayment period

statement of right to prepay at any time without penalty

This disclosure does not need to be sent out for Consolidation Loans. Previous language specifically excluded


Item # Subject


citations]


*Effective Date


Consolidation loans but new language appears to exclude consolidation loans by not listing them in the applicable loan types.

43

Lender Disclosure - Separate Notification Bill Section: 434(c ) HEA Section: 433( c)

HEOA restates current requirement that lender must provide FFELP borrowers a rights and responsibilities statement separate from the initial disclosure, and that it must include a statement of the consequences of default and that a default will be reported to a consumer reporting agency. Clarifies that this disclosure must be “in simple and understandable terms” instead of “in plain English.”

No real change to current practice.

44

Lender Disclosure - Special Disclosure Rules on PLUS Loans and Unsubsidized Stafford Loans Bill Section: 434(d) HEA Section: 433(d)

HEOA restates current requirement that PLUS and unsubsidized Stafford loans are exempt from the lender providing a disclosure of monthly payment amounts. The lender may provide a sample projection of monthly repayment amounts assuming different levels of borrowing and interest accruals resulting from capitalization of interest. HEOA also provides a new requirement to include the cost capitalization and of paying interest as it accrues.

August 14, 2008 DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 129)

45

Lender Disclosure - During Repayment Bill Section: 434(e)(1) HEA Section: 433(e)(1)

HEOA requires a lender to provide Stafford, PLUS and Consolidation borrowers with a bill or statement (as applicable) that corresponds to each payment installment time period in which a payment is due and that includes:

original principal amount current balance, as of the time of the bill or

statement interest rate total amount paid in interest aggregate amount paid for the loan, including

amount paid in interest, amount paid in fees, and amount paid against the balance

description of each fee charged for the most recent installment

date by which the borrower needs to make a payment in order to avoid additional fees and the amount of such payment and the amount of such

Loans for which the first payment is

due on or after July 1, 2009



Item # Subject


citations]


*Effective Date


fees address and toll-free phone number for payment

and billing error purposes a reminder of the option to change repayment

plans a list of repayment plans link to the Department’s Website to obtain

repayment plan information and directions to change plans

46

Lender Disclosure - Information Provided to Borrowers Experiencing Difficulty in Making Loan Payments Bill Section: 434(e)(2) HEA Section: 433(e)(2)

HEOA requires a lender to provide a borrower who notifies the lender of difficulty making payments on a Stafford, PLUS or Consolidation loan with the following, in simple and understandable terms:

description of repayment plans available to the borrower

how to request a change in plans description of the requirements for obtaining

forbearance and associated costs description of the options to avoid default, and

any fees or costs associated with these options

Loans for which the first payment is

due on or after July 1, 2009

The lender may provide this notice verbally, in writing, or electronically.


47

Lender Disclosure – During Delinquency Bill Section: 434(e)(3) HEA Section: 433(e)(3)

HEOA requires a lender to provide a borrower who is 60 days delinquent on a Stafford, PLUS or Consolidation with a notice of the following:

date on which the loan will default if no payment is made

minimum payment to avoid default description of options to avoid default (and any

fees or costs) including a description of deferment and forbearance

discharge options resources, including nonprofit organizations,

advocates, and counselors (ED Ombudsman) where the borrower can receive advice and assistance on repayment

Loans that became delinquent on or

after July 1, 2009

The lender may provide this language within existing delinquency letters.



Item # Subject


citations]


*Effective Date


48

Lender Disclosure – Cost of Disclosure and Consequences of Nondisclosure Bill Section: 434 HEA Section: 433(f)

HEOA restates current provisions for all disclosures under HEA Section 433 that:

disclosures shall be available without cost to the borrower

lender’s failure to provide information shall not relieve a borrower of the obligation to repay a loan or provide a basis for a claim for civil damages

disclosures are not subject to the Truth in Lending Act

Secretary may limit, suspend, or terminate the a lender’s participation for non-compliance

August 14, 2008 Removes lender protection from loss of guarantee or reinsurance for failure to provide any of the disclosures under HEA Section 433. The following language was stricken from 433(c): The failure of an eligible lender to provide information as required by this section shall not (3) be deemed to abrogate the obligation of the Secretary under a contract of insurance or reinsurance, or the obligation of a guaranty agency under a contract of guaranty.


GUARANTORS – CONSUMER EDUCATION INFORMATION

49

Guarantors - Consumer Education Information Bill Section: 435 HEA Section: 433A(a)

New HEA Section 433A requires guaranty agencies to work with their schools to develop high-quality educational programs, materials and training for students and families in budgeting and financial management relating to student loans. Programs and materials are to be provided before, during, and after a students’ enrollment in an institution of higher education. These activities shall be considered default reduction activities.

August 14, 2008 Guaranty agencies are not prohibited from using existing programs and materials in meeting requirements or from providing materials to Direct Loan schools. Per DCL GEN-08-12/FP-08-10, a guaranty agency’s activities under this section are considered default reduction activities for the purpose of using restricted reserve funds as provided under section 422(h)(4)(B) of the HEA. Lenders and loan servicers may also provide outreach and financial literacy information consistent with these requirements to schools.


COHORT DEFAULT RATE

50

Cohort Default Rate – Definition Bill Section: 436(e) HEA Section: 435(m)

The definition of cohort default rate changes. Cohort default rate now means students who default before the end of the second fiscal year following the fiscal year in which students entered repayment. For the transition period, cohort default rates used for any sanctions imposed will be calculated as before this change until there are 3 years of rates under this new statutory calculation.

FY 2009 Change from 2 to 3 year calculation methodology. ED’s transition plan for providing cohort default rate calculations beginning with the FY 2009 rates are as follows:

ED will calculate the draft FY 2009 cohort rates in January 2011 (released February 2011), and the official rates


tended for informational purposes only. Refer to the bill for specific information. of 103 Draft – OGSLP Last Updated June 19, 2009

Note: This summary is in

Item # Subject


citations]


*Effective Date


in August 2011 (released September 2011) using the current two year default period (loans entering repayment between 10/01/08 and 09/30/09 and defaulted between 10/01/08 and 09/30/10).

ED will recalculate the draft FY 2009 cohort rates in January 2012 (released February 2012), and the official rates in August 2012 (released September 2012) using the three year default period (loans entering repayment between 10/01/08 and 09/30/09 and defaulted between 10/01/08 and 09/30/11).

51

Cohort Default Rate – School Ineligibility Bill Section: 436(a) HEA Section: 435(a)(2)(ii) 435(a)(2) (B)(ii) 435(a)(2) (B)(iii)

HEOA continues the cohort default rate ineligibility provisions for schools through fiscal year 2011. The trigger remains at 25 %. HEOA raises the default rate that triggers ineligibility to 30 % on or after fiscal year 2012.

FY 2012

Fiscal year 2009 data that will be published in FY 2012 cohort default rate calculations.


52

Exceptions to Multiple Disbursement Rules Bill Section: 427 HEA Section: 428G(a)

The cohort default rate used to determine exceptions to rules that would otherwise require the multiple disbursements of loans where the period of enrollment is a single term and the 30 day delayed delivery for loans to first year, first time borrowers is raised from 10% to 15% by the HEOA.

October 1, 2011

These changes are made to allow for higher cohort default rates under the new 3-year period of determining cohort default rates.


53

Cohort Default Rate – Default Prevention and Assessment of Eligibility Bill Section: 436(a)

HEOA adds new default prevention and assessment of eligibility requirements for default rates that are equal to or greater than the 30% threshold percentage applicable for the fiscal year 2012 and beyond.

For the first year that any institution that is greater than the 30% threshold, they must establish a default prevention task force to

FY 2012 Fiscal year 2009 data that will be published in FY 2012 cohort default rate calculations.



Item # Subject


citations]


*Effective Date


HEA Section: 435(a)(7)(A) and 435(a)(7)(B)

prepare and submit a plan to ED that: o identifies factors, o establish steps to improve rate, and o specify actions that can improve

student repayment If an institution’s threshold is still equal or

greater than the 30% threshold for 2 consecutive years the task force must reevaluate the plan.

ED will review plans submitted and may direct that plans be amended to include actions that ED determines will promote student loan repayment.

54

Cohort Default Rate – Appeals for Regulatory Relief Bill Section: 436(a) HEA Section: 435(a)(3) and 435(a)(5)

HEOA adds a new appeal for relief in regards to a school’s cohort default rate:

An institution whose cohort default rate is equal to or greater than the 30% threshold percentage for fiscal year 2012 and beyond for 2 consecutive years has 30 days to file an appeal after receiving notification from ED.

Within 45 days ED will issue a decision. If the institution is found to have exceptional

mitigating circumstance, ED may not subject the institution to provisional certification solely based on the cohort default rate.

August 14, 2008 Fiscal year 2009 data that will be published in FY 2012 cohort default rate calculations. Per DCL GEN-08-12/FP-08-10, the HEA also now provides, effective August 14, 2008, that if a school files a successful extenuating mitigating circumstances appeal after two consecutive years of cohort default rates that equal or exceed the applicable cohort threshold percentage, ED may not place the institution in provisional certification status based solely on the institution’s cohort default rate.


55

Cohort Default Rate - Participation Rate Bill Section: 436(a) HEA Section: 435(a)(8) (A)

HEOA increases the participation rate index (PRI) threshold from 0.0375 to 0.0625. Institutions with a participation rate index equal to or less than 0.0625 for the 3 most recent years are not subject to ineligibility due to high default rates.

FY beginning on or after

October 1, 2011


56

Cohort Default Rate – Published Report Bill Section: 436(e) HEA Section: 435(m)

ED must publish annually, a list of current and lifetime cohort default rates by school type. This list must include percentage of loan receiving students (former and current) who enter repayment during that fiscal year and who defaulted before the end of the succeeding fiscal year.

FY 2009 ED will have to continue calculating the default cohort rates using the old method (1-year cohorts) for purposes of this reporting, until such time as they have 3 consecutive years of calculations under the new method.

LENDER PROHIBITED INDUCEMENTS


Item # Subject


citations]


*Effective Date


57

Lender Prohibited Inducements Bill Section: 436(c ) HEA Section: 435(d)(5)

HEOA adds new prohibited inducements and actions to the existing ones that will disqualify a lending institution as an eligible lender for Title IV purposes if it engages in such activities:

Payments include payments for referrals, and processing or finder fees. Lists specific new inducements such as prizes, stock or securities, travel, entertainment expenses, tuition payment or reimbursement, provision of information technology equipment at below-market value, and additional financial aid funds that are paid to a school or school employee in order to secure FFELP loan applicants. Points, premiums and other inducements remain as well.

Specifies unsolicited mailings as postal or electronic means. Adds clarification that mailings cannot be done to students in secondary or post-secondary schools or the families of such students. Retains exception for those students or borrowers who have already received a FFELP loan from the lender.

May not enter into a consulting agreement or contract providing services to a lender with an employee who works in the financial aid office or has responsibilities with respect to student loans or other financial aid at an institution of higher education.

May not compensate an employee who works in the financial aid office or person with responsibilities with respect to student loans or other financial aid, at an institution of higher education and serves on an advisory board or a commission established by lenders or a group of lenders. Provides an exception for reasonable expenses incurred in providing such service.

Perform or paid for someone to perform a function an institution of higher education is required to perform under any Title IV program. Provides an exception that lenders can perform

Guaranty Agency and lender activities

undertaken on or after

August 14, 2008

Takes effect after notice and opportunity for a hearing with ED



Item # Subject


citations]


*Effective Date


exit counseling functions in accordance with Section 485(b).

Pay a student at an institution of higher education to act as the lender’s representative to secure applications unless the student is employed by the lender for other purposes and the lender has made all appropriate disclosures regarding employment.

Offered, directly or indirectly loans as an inducement for a borrower to purchase a policy of insurance or other product, or any other fraudulent or misleading information.

Engaged in fraudulent advertising

Revises the permitted activities to state that a lender may provide technical assistance to institutions of higher education comparable to technical assistance provided by the ED.

SCHOOL AS LENDER

58

School as a Lender - Program Audit Bill Section: 436(d) HEA Section: 435(d)(8)

Each institution serving as an eligible lender and each lender serving as a trustee must complete and submit a compliance audit annually. The audit must show that all proceeds minus reasonable expenses are being used for need based grants and that these grants are not being used in place of other grants, but in addition to these grants.

First auditable period of the

school lender or ELT that begins on

or after August 14, 2008

The regulations governing lender trustee relationships with a school or school-affiliated organization are under 34 CFR 682.602.


TOTAL AND PERMANENT DISABILITY DISCHARGE

59

Total and Permanent Disability Discharge - Medically Physical or Mental Impairment Bill Section: 437(a) HEA Section: 437(a)(1)

HEOA establishes a new condition for total and permanent disability (TPD) discharge. It stipulates that all borrowers who are “unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that:

o can be expected to result in death, o has lasted for a continuous period of not less than

60 months, or o can be expected to last for a continuous period of

not less than 60 months” will be eligible for discharge

HEOA allows ED to develop safeguards in the administration of

July 1, 2010 This discharge applies all Title IV loans.



Item # Subject


citations]


*Effective Date


the new TPD condition described above, in order to prevent fraud and abuse. ED can still require a conditional discharge period.

60

Total and Permanent Disability Discharge - Medical Impairment Bill Section: 437(a) HEA Section: 437(a)(1) (A) and (B)

HEOA authorizes ED to establish regulations requiring the reinstatement of, and resumption of collection activities on, any loan previously discharged under the new medically physical or mental impairment discharge type, in the event the borrower, after the discharge date, receives a new Title IV loan or earns income in excess of the poverty line. Subparagraph B allows reinstatement for any other reason ED deems appropriate.

July 1, 2010

Per DCL GEN-08-12/FP-08-10, the HEOA authorizes the Department to develop any necessary safeguards to prevent fraud and abuse in discharging loans on the basis of death or total and permanent disability, including developing regulations to require the reinstatement and resumption of collections on a discharged loan, if after the discharge, the borrower

receives another Title IV loan; the borrower earns income in excess of

the poverty line; or for any other reason the Department

determines necessary


61

Total and Permanent Disability Discharge - Veterans Affairs Documentation Bill Section: 437(b) HEA Section: 437(a)(2)

HEOA establishes that, for the purposes of loan discharge, a “borrower who has been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected condition and who provides documentation of such determination to Secretary of Education, shall be considered permanently and totally disabled.” It also stipulates that a borrower in this condition will not be required to present further supporting documentation.

August 14, 2008

ED makes the determination. There is not a three-year conditional period for borrowers in this category of total and permanent disability. Borrower requests for loan discharge based on the Secretary of Veterans Affairs determination that the borrower is unemployable due to a service connected condition, received by the loan holder on or after August 14, 2008. Per DCL GEN-09-07, a 100% or total disability rating from the VA represents a determination that the veteran has a total impairment in earning capacity, i.e., is unemployable. In addition, a veteran with a less than 100% disability rating may qualify for total disability based on an individual unemployability determination, if the VA determines that the veteran's service-connected disabilities are sufficient to result in unemployability. There are two types of VA determinations that qualify a veteran for a discharge of his or her Title IV student loans based on the statutory standard:

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 132-133) DCLGEN-09-07/FP-09-05/CB-09-04: This letter explains the change of the HEA by the HEOA that establishes a separate standard for determining whether certain veterans are totally and permanently disabled for Title IV loan discharge purposes. This letter provides implementation guidance to FFEL lenders, guaranty agencies, and Perkins school lenders on the procedures for processing total and permanent disability discharge requests.

http://www.ifap.ed.gov/dpcletters/GEN0907.html



Item # Subject


citations]


*Effective Date


1. A determination that the veteran has a service-connected disability, or service connected disabilities, that are 100% disabling; or 2. A determination that the veteran is totally disabled based on an individual unemployability determination.

The VA grants individual unemployability only for service-connected conditions. Therefore, any determination of individual unemployability qualifies a veteran for discharge. In the case of a determination that a veteran is 100% disabled, the determination must specify that the disabilities are service-connected.

Title IV Student Assistance - Part F – Need Analysis

COST OF ATTENDANCE

62

Needs Analysis - Cost of Attendance Bill Section: 471 HEA Section: 472(3)

HEOA adds a new subparagraph (C ) which permits students living in military housing or receiving a basic allowance for housing to receive an allowance for board, but not for room, when determining the cost of attendance.


PROFESSIONAL JUDGMENT

63

Professional Judgment – Special Circumstances Bill Section: 472 HEA Section: 479A(a)(1)-(3)

HEOA expands the list of special circumstances a school may consider:

medical, dental, or nursing home expenses not covered by insurance

unusually high child care or dependent care costs and student or a family member who is a dislocated

worker

August 14, 2008 DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 79) DCL GEN-09-04 - This letter reminds financial aid administrators of their ability to exercise professional judgment when determining the eligibility of students for federal student aid and encourages aid



Item # Subject


citations]


*Effective Date


administrators to consider special circumstances of students and families during these challenging economic times. DCL GEN-09-05 - This letter provides information to financial aid administrators regarding their ability to exercise, if properly documented, professional judgment when determining the eligibility of a student for federal student aid. It also informs aid administrators about letters that will be provided to all recipients of unemployment insurance benefits by state unemployment agencies that can be used by a financial aid administrator to document special circumstances of students during these challenging economic times.

64

Professional Judgment - Parental Non-Support and FAFSA Refusal Bill Section: 472 HEA Section: 479A(a)(4)

HEOA permits a school to offer an unsubsidized Stafford loan to a dependent student without parental completion of the FAFSA if the school verifies that the parent(s) does not provide financial support and refuses to file the FAFSA.

Beginning with a loan for any loan period that begins

on or after August 14, 2008, or includes that

date

This new provision is not the same as the dependency override provision of section 480(d)(1)(I) of the HEA. Per DCL GEN-08-12/FP-08-10, in instances when a financial aid administrator decides, based upon documentation submitted by the dependent student, to award an unsubsidized FFEL or Direct Loan without the student’s parent or parents having completed the FAFSA, but not to perform a full dependency override, the dependent student would be eligible to receive only an unsubsidized loan and not any other Title IV assistance. In addition, the student’s parent(s) would not be eligible to apply for a PLUS loan on the student’s behalf.



Note: This summary is intended for informational purpos on. of 103 Draft – OGSLP Last Updated June 19, 2009

es only. Refer to the bill for specific informati

Item # Subject


citations]


*Effective Date


The maximum annual unsubsidized loan amount that a dependent student may receive under the new authority described in this letter is the “base” annual loan limit for the student’s grade level plus the additional unsubsidized amount of $2,000 that was added to the annual loan limits for dependent students by the ECASLA. Note that the additional unsubsidized loan amount that a dependent student may receive under this new authority is only the $2,000 that is available to all dependent students. Before a financial aid administrator exercises his or her discretion to award a dependent student an unsubsidized loan without parental FAFSA information, the financial aid administrator must verify that the parent(s) has ended financial support of the student and refuses to complete the parental sections of the FAFSA. Self-certification from the dependent student is not sufficient. In most instances, this requirement can be met by the financial aid administrator obtaining a signed and dated statement from one of the student’s parents specifically stating that the parent(s)

• has stopped providing financial support to the student (including the date when the financial support stopped); • will not provide financial support in the future; and • refuses to complete the parental section of a FAFSA.

There is no requirement that the parent provide a reason for ending financial support and refusing to complete the FAFSA. If the student informs the financial aid administrator that his or her parent(s) will not provide the required verification statement, the financial aid administrator must obtain documentation from a third party (e.g., teacher, counselor, clergy, court) describing the student’s relationship with


Item # Subject


citations]


*Effective Date


his or her parents. Finally, before making a decision the financial aid administrator may, but is not required to, determine how the student intends to financially support himself or herself without parental support.

SIMPLIFIED NEEDS TEST

65

Needs Analysis - Simplified Needs Test Change Bill Section: 472 HEA Section: 479A(a)

HEOA amends the effective date of Section 603(b) of the College Cost Reduction and Access Act (CCRAA), which modified the criteria for simplified needs test, from the July 1, 2009 effective date, to “the date of enactment of H.R. 4137” which is August 14, 2008.

August 14, 2008

FAFSA SIMPLIFICATION

66

Needs Analysis - FAFSA Simplification Bill Section: 473 HEA Section: 480(a)(1)(B)

HEOA adds new subparagraph which authorizes ED to issue regulations that allow the use of the second preceding tax year information to simplify the FAFSA and the application process. This may include data sharing between the IRS and ED of Education with the taxpayer’s permission.

July 1, 2010


EXPECTED FAMILY CONTRIBUTION

67

Needs Analysis - VA Educational Benefits Exclusion Bill Section: 473 HEA Section: 480(a)(2)

HEOA excludes veterans’ education benefits from income or assets when determining the borrower’s expected family contribution (EFC).

July 1, 2010


68

Needs Analysis - Untaxed Income and Benefits

HEOA excludes value of military housing or basic housing allowance from taxable income when determining the borrower’s expected family contribution (EFC).

July 1, 2010

This allowance is determined under section 403(b) of Title 37, U.S.C. and can be found at - http://frwebgate.access.gpo.gov/cgibin/getdoc.cg

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by

ded for informational purposes only. Refer to the bill for specific information. of 103 Draft – OGSLP Last Updated June 19, 2009

Note: This summary is inten

Item # Subject


citations]


*Effective Date


Bill Section: 473 HEA Section: 480(b)(1)(E)

i?dbname=browse_usc&docid=Cite:+37USC403b

enactment of the HEOA - (DCL page 82)

69

Needs Analysis - Determining EFC Bill Section: 473 HEA Section: 480(e)

HEOA excludes income earned from work under a cooperative education program at a school when determining expected family contribution (EFC).

July 1, 2010


INDEPENDENT STUDENT

70

Needs Analysis - Independent Student Bill Section: 473 HEA Section: 480(d)(1)

HEOA amends the dependency status changes enacted by the College Cost Reduction and Access Act (CCRAA) to clarify that the following students are considered independent:

orphans, those in foster care, or wards of the court

or those that were orphans, in foster care, or a ward of the court at any time when the individual was 13-years-old or older

students who are or were immediately prior to attaining the age of majority, an emancipated minor or in legal guardianship as determined by a court of competent jurisdiction in the student’s state of legal residence

July 1, 2010

This CCRAA change is effective 7/1/2009; but the HEOA clarification will not be reflected until the 2009-2010 FAFSA is available (1/1/2010). Prior to the clarification provided in HEOA, students whose emancipated minor status or legal guardianship terminated due solely to their age would be reclassified as dependent students.


OTHER FINANCIAL ASSISTANCE

71

Needs Analysis - Other Financial Assistance Bill Section: 473 HEA Section: 480(j)(1)

HEOA removes veterans’ education benefits from the definition of “other financial assistance” in the need analysis.

July 1, 2010 DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 82)

Title IV Student Assistance - Part D – Federal Direct Student Loan

FEDERAL DIRECT STUDENT LOAN (DL) PROVISIONS

Federal Direct Student Loan -

HEOA adds a new paragraph as a technical amendment allowing for the income-based repayment plan as an


Grad PLUS loans are eligible DCL GEN-08-12/ FP-08-10:

his summary is intended for informational purposes only. Refer to the bill for specific information. of 103 Draft – OGSLP Last Updated June 19, 2009

Note: T

Item # Subject


citations]


*Effective Date


72

Income Based Repayment Bill Section: 451(a) HEA Section: 455 (d)(1)

additional repayment plan under DL. Clarifies that the income-based repayment plan is not available to the borrower of a parent DL PLUS loan or a DL Consolidation loan, if the proceeds of the loan were used to discharge the liability on a parent DL PLUS loan or a parent FFEL PLUS loan (428B).

July 1, 2009, implementation of

IBR

Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 119)

73

Federal Direct Student Loan – Public Service Job Definition Bill Section: 451(b) HEA Section: 455(m)(3)(B)(i)

The definition of public service job is expanded for public health workers to include those who have a full-time job as:

nurses nurse practitioners nurses in a clinical setting full-time professionals engaged in health care

practitioner occupations, as such terms are defined by the Bureau of Labor Statistics

The definition of public service job is expanded for early childhood workers to include those who have a full-time job in:

licensed or regulated child care Head Start State funded prekindergarten

The definition of public service job is clarified for government workers to exclude time served as a member of Congress.

August 14, 2008 Bureau of Labor and Statistics web site: http://www.bls.gov/soc/


74

Federal Direct Student Loan – Public Service Job Definition Bill Section: 451(b) HEA Section: 455(m)(3)(B)(ii)

The definition of public service job for teachers in high-needs areas is expanded to include those in shortage areas, including those:

teaching as nurse faculty foreign language faculty part-time faculty at community colleges


75

Federal Direct Student Loan – Public Service Ineligibility for Double Benefits Bill Section: 451(b)

HEOA adds new paragraph (4) stating no borrower may receive forgiveness of loan obligations for the same service under public service loan forgiveness and HEA Sections:

428J – FFELP Loan Forgiveness for Teachers 428K – FFELP Loan Forgiveness for Service in

Areas of National Need


http://www.bls.gov/soc/


Item # Subject


citations]


*Effective Date


HEA Section: 455(m)(4)

428L – FFELP Loan Repayment for Civil Legal Assistance Attorneys

460 – DL Loan Cancellation for Teachers

76

Federal Direct Student Loan - Active Duty Service Members Bill Section: 451(d) HEA Section: 455(o)

HEOA adds new paragraph, Section 455(o), stating that interest shall not accrue on DL loans for an eligible active duty military borrower. An eligible military borrower is an individual who is serving on active duty or performing qualifying National Guard duty during a war or other military operation or national emergency. It also includes an individual who is serving in an area of hostilities in which the service qualifies for special pay under Section 310 of Title 37, U.S.C. - “Special pay: duty subject to hostile fire or imminent danger.” In the case of a DL Consolidation loan first disbursed on or after 10/1/2008, these provisions only apply to the portion of the Consolidation loan that repaid a DL loan made on or after 10/1/2008. A qualified borrower may receive this benefit for no more than 60 months.

Direct Loan first disbursed on or

after October 1, 2008, and any portion of

a Direct Consolidation

Loan that repaid a Direct Loan first disbursed on or

after October 1, 2008

The 60-month limit appears to be borrower specific, not loan specific. Per DCL GEN-08-12/FP-08-10, for a Direct Loan borrower who also qualifies for the military service deferment, the borrower’s deferment period and 60-month period of no interest accrual run concurrently.


77

Federal Direct Student Loan – Teacher Loan Forgiveness Bill Section: 454 HEA Section: 460(b)

HEOA adds “location” to the requirements for where a qualifying person must teach. A teacher can now be at a school or location that qualifies.

Teacher Loan Forgiveness and Teacher Loan Forgiveness Forbearance Applications


August 14, 2008


78

Federal Direct Student Loan - Teacher Loan Forgiveness Bill Section: 454 HEA Section: 460(c )(3)

HEOA adds the chief administrative officer of an educational service agency as a person authorized to certify a borrower’s eligibility for those employed by an educational service agency.



August 14, 2008



Item # Subject


citations]


*Effective Date


79

Federal Direct Student Loan - Teacher Loan Forgiveness Bill Section: 454 HEA Section: 460(g)(2)

Consolidates the double benefit exceptions into one paragraph. No borrower may receive forgiveness of loan obligations for the same service under teacher loan forgiveness and

428J – FFELP Loan Forgiveness for Teachers

428K – FFELP Loan Forgiveness for Service in Areas of National Need

455 (m) – DL Repayment Plan for Public Service Employees

Subtitle D of Title I of the National and Community Service Act of 1990 (AmeriCorp Program)



August 14, 2008


Title IV Student Assistance - Part G – General Provisions


Item # Subject


citations]


*Effective Date


FORMS

80

Forms – Reduction of Income and Asset Information to Determine Eligibility for Student Financial Aid – Continuation of Current FAFSA Simplification Efforts Bill Section: 483 HEA Section: 483(f)(1)

ED shall continue to examine: How the IRS can provide ED with income and other

data needed to compute expected family contribution for taxpayers and dependents of taxpayers, and when in the application cycle the information can be made available.

Whether data provided by the IRS can be used to pre-populate the electronic version of the FAFSA with student and parent taxpayer information or generate an expected family contribution without additional action by the student or taxpayer.

Whether the data elements collected on the FAFSA that are needed to determine eligibility but not expected family contribution, such as citizenship status and driver’s license number, can be reduced without adverse effect.


81

Forms – Reduction of Income and Asset Information to determine Eligibility for Student Financial Aid – Report on FAFSA Simplification Efforts to Date Bill Section: 483 HEA Section: 483(f)(2)

ED shall provide a written report to the authorizing committees on the work the Department has done with Treasury regarding the following: How expected family contribution can be calculated

using substantially less income and asset information than was used 3/21/08.

The extent to which the reduced income and asset information will result in a redistribution of Federal grants and subsidized loans, State aid, or institutional aid, or in a change in the composition of the group of recipients of such aid and the amount of such redistribution.

How the alternative approaches for calculating the expected family contribution will rely on information available on the 1040, 1040EZ, and 1040A include formulas for adjusting income or asset information to produce similar results to the existing approach with less data.

How the IRS can provide ED income and other data

No later than 90 days after date of

enactment - November 12, 2008

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 91 and 185


Item # Subject


citations]


*Effective Date


needed to compute an expected family contribution and when in the application cycle the data can be made available.

Whether data provided by the IRS can be used to pre-populate the electronic version of the FAFSA with student and parent taxpayer data or generate an expected family contribution without additional action from the student and taxpayer.

The extent to which the use of income data from two years prior the a student’s planned enrollment date changes the expected family contribution computed pursuant to part F, and potential adjustments to the need analysis formula that will minimize the change.

The extent to which the data elements collected on the FAFSA on 3/31/08 that are needed to determine eligibility but not expected family contribution, such as citizenship status and driver’s license number, can be reduced without adverse effect.

82

Forms – Reduction of Income and Asset Information to Determine Eligibility for Student Financial Aid – Study – Formation of Study Group Bill Section: 483 HEA Section: 483(f)(3)(A) and (B)

By November 12, 2008, the Comptroller General shall convene a study group including the Secretaries of Education and Treasury, the Director of the Congressional Budget Office, representatives of institution of higher education , state chief executive officers of higher education to review the work of ED and Treasury to assess alternative approaches and make recommendations to the authorizing committees for calculating expected family contribution under the statutory need analysis formula in effect on August 13, 2008 and under a new calculation that will use less income and asset information than was used for the 2008-2009 FAFSA.

No later than 90 days after date of

enactment - November 12, 2008

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages, 91 and 185-186)

83

Forms – Adjustments Bill Section: 483 HEA Section: 483(h)

On the form notifying students of expected family contributions ED shall notify students that, on a case-by-case basis, they may qualify for an adjustment to the cost of attendance or values of data items required to calculate the expected family contribution. The notification shall specify the special circumstances


d for informational purposes only. Refer to the bill for specific information. of 103 Draft – OGSLP Last Updated June 19, 2009

Note: This summary is intende

Item # Subject


citations]


*Effective Date


under which a student or family member may qualify for such an adjustment and additional information regarding the steps a student or family member may take in order to seek an adjustment.

84

Forms – Model Institution Financial Aid Offer Form Bill Section: 484 HEA Section: 483(h)

For the financial aid offer form, ED shall convene a group consisting of:

Students Families of students Secondary school guidance counselors Representatives of institutions of higher

education Nonprofit consumer groups

This group will make recommendations to improve financial aid offer forms. ED must then:

Report to the Congressional Education Committees

Include a model financial aid offer form which includes:

o Cost of attendance o Amount of aid that does not have to be

repaid o Types and amounts of loans for which

the student is eligible o The net amount the student will have to

pay for the year o Where additional information on the

financial aid offered may be sought o Any other information determined

necessary by ED

Convene the group no later than six

months after August 14, 2008

(February 14, 2009) and

develop a model form no later than August 14, 2009


SPECIAL CIRCUMSTANCES

Special Circumstances - Unsubsidized

HEOA adds Unsubsidized Stafford loans for middle-income borrowers to the list of loan types that are excluded from certain requirements when a financial aid

July 1, 2010


Item # Subject


citations]


*Effective Date


85 Stafford Loans Bill Section: 485 HEA Section: 484(b)

administrator can exercise discretion that special circumstances exist.

ABILITY TO BENEFIT

86

Ability to Benefit - Non-High School Graduates Bill Section: 485 HEA Section: 484(d)(4)

HEOA adds that students who have not graduated from high school, and have completed six credit hours or equivalent coursework applicable to a degree or certificate shall be determined by the institution of higher education as having the ability to benefit from the education or training and are therefore, eligible for financial aid.


DISTANCE EDUCATION

87

Definition of Distance Education Bill Section: 103 HEA Section: 103(7)

Distance Education – means the use of one or more technologies (internet, one-way and two-way transmissions through open broadcast, closed circuit, cable, microwave, broadband lines, fiber optics, satellite, or wireless communication devices, audio conferencing or video cassettes, DVDs, CD-ROMs, if cassettes, DVDs or CD-ROMs are used in a course in conjunction with any of the technologies as stated above) to deliver instruction to students who are separated from the instructor and to support regular and substantive interaction between the students and the instructor synchronously or asynchronously.



Item # Subject


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88

Distance Education - Courses offered Bill Section: 485 HEA Section: 484(l)

Changes “Telecommunication courses” to “Distance Education” courses and clarifies that these distance education courses are not considered correspondence courses when the certificates or degrees obtained by students from the institution are recognized certificates or degrees by that institution. For award years prior to July 1, 2008, ED may not penalize students or institutions based on prior award violations of this subsection, if the institution can demonstrate to ED that its course of instruction would have been in conformance with the requirements of this subsection.


INCOME DATA FROM Internal Revenue Service

89

Income Data from Internal Revenue Service (IRS) Bill Section: 485 HEA Section: 484(q)

The new provision permits ED to obtain information from the IRS to pre-populate the student’s financial aid application as opposed to only being able to verify with the IRS, that the information reported on the student’s financial aid application was accurate.

July 1, 2010 Permits ED to require applicants to consent to the disclosure of such information as a condition to receive financial assistance.


SUSPENSION OF ELIGIBILTY

90

Suspension of Eligibility - Drug-related offenses Bill Section: 485 HEA Section: 484(r )(2)

HEOA adds that students who lose eligibility based on drug-related offenses may regain their eligibility before the ineligibility period expires if the student successfully passes two unannounced drug tests conducted by a drug rehabilitation program that complies with ED’s criteria.

July 1, 2010 Per DCL GEN-08-12/FP-08-10, the HEOA adds a new section 484(t) of the HEA that now requires the Secretary, by August 14, 2009, to analyze data from the FAFSA for students denied Federal assistance based on a drug conviction while receiving Federal aid. The results from the analysis must be made available continuously on the Department’s website and the Digest of Education Statistics. Each fiscal year, the results must also be provided to Congress.


STUDENTS WITH INTELLECTUAL DISABILITIES

Note: This summary is intended for informational purposes only ation. of 103 Draft – OGSLP Last Updated June 19, 2009

. Refer to the bill for specific inform

Item # Subject


citations]


*Effective Date


91

Students with Intellectual Disabilities Bill Section: 485 HEA Section: 484(s)

HEOA adds new provisions that require students with intellectual disabilities be accepted or enrolled in a program for students with intellectual disabilities and requires those students to maintain satisfactory progress to receive certain grants or work assistance. ED is authorized to waive any statutory provision under certain conditions to ensure that programs enrolling students with intellectual disabilities may receive financial assistance.

August 14, 2008 Subject to regulation.

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 94-95 and 163)

READMISSION REQUIREMENTS

92

Readmission Requirements - Service Members Bill Section: 487 HEA Section: 484C

HEOA adds new section outlining the following requirements: Defines “service in the uninformed services” to mean

active duty in the Armed Forces, National Guard or Reserve for a period of more than 30 days.

Prohibits discrimination with respect to readmission against students who serve in the uniformed services.

A student is entitled to readmission to the institution of higher education if the student provides advance notice to the appropriate school official, submits a notice to reenroll, and the cumulative length of absences from that institution due to uninformed service does not exceed 5 years. Some exceptions to the 5 year period exist as described in 484C(c )(3).

A notice to reenroll is not required if such notice is precluded by military necessity where such notice could compromise or adversely affect the mission or military operation.

A student who fails to give advance notice may submit, at the time the student seeks readmission, an attestation to the school that the student performed uniformed services that necessitated the student’s absence from the school.

A student must notify the institution of higher education of the student’s intent to return to the institution no later than 3 years after the uniformed service has been completed, or 2 years after the recovery period for students who are hospitalized or

August 14, 2008 Per DCL GEN-08-12/FP-08-10, a student who submits an application for readmission to an institution must provide to the institution documentation to establish that

o the student has not exceeded the specified service limitations; and

o the student’s eligibility for readmission has not been terminated.

An institution may not delay or attempt to avoid a readmission of a student under this section by demanding documentation that does not exist, or is not readily available, at the time of readmission. A student’s eligibility for readmission to an institution under this section by reason of such student’s service in the uniformed services terminates upon the occurrence of any of the following events:

o a separation of such person from the Armed Forces (including the National Guard and Reserves) with a dishonorable or bad conduct discharge;

o a dismissal of such person



Item # Subject


citations]


*Effective Date


recovering from an illness or injury incurred during the uniformed service period.

A student who fails to apply for readmission within the 2 or 3 year periods is subject to the institution’s leave of absence policy.

A student applying for readmission must provide the school necessary documentation, and the school may not delay or deny readmission to the student.

The school must readmit the student with the same academic status the student achieved when that student last attended the school.

A student’s eligibility for readmission to the institution terminates when the student is separated from the Armed Forces due to a dishonorable or bad conduct discharge, court-martial, or is incarcerated in a Federal or State facility after having been found guilty of the offense by a court.

permitted under section 1161(a) of Title 10, U.S.C.; or

o a dropping of such person from the rolls pursuant to section 1161(b) of Title 10, U.S.C.

Title 10 of the U.S.C. can be accessed at http://www.access.gpo.gov/uscode/title10/title10.html Title 14 of the U.S.C. can be accessed at http://www.access.gpo.gov/uscode/title14/title14.html

SCHOOL INFORMATION TO STUDENTS

93

ED List of Reports and Disclosures to Schools – Master Calendar Bill Section: 482 HEA Section: 482(e)

A new paragraph (e) is added to require ED to provide to schools a list of all reports and disclosures the school is required to complete or submit under the Act. ED must publish this list prior to the beginning of each award year. The list shall include:

the date the report or disclosure is due the required recipients the method of transmittal or dissemination a description of the contents of each report references to the statutory regulatory or guidance that authorizes the

report of disclosure any other information that is pertinent to the

content or distribution of the report or disclosure

August 14, 2008 ED is developing the compliance calendar and intends to post it to a Website prior to the start of the 2009-2010 award year.

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 62- 63)

School and Financial Assistance Information -

An eligible school must carry out information dissemination activities for prospective or enrolled students. Additional information that schools must provide to students include:

August 14, 2008



Item # Subject


citations]


*Effective Date


94

Prospective or Enrolled Students Bill Section: 488 HEA Section: 485(a)(1)

Any plans for improving the academic program of the school.

The terms and conditions of loans the students receive. (Perkins loan program has been added to this section.)

The school’s policies and sanctions related to copyright infringement.

The student body diversity at the school The types of graduate and professional education in

which the graduates enrolled. Information on the school’s placement in employment

for students attending that school. The fire safety report, retention rate of certain

undergraduate students entering the school, and the school’s policies regarding vaccinations.

enactment of the HEOA - (DCL pages 95-96)

95

School and Financial Assistance Information - Prospective or Enrolled Students - Campus Security and Crime Statistics Bill Section: 488 HEA Section: 485(f)

Additional requirements are added for disclosures by the school regarding security policies and crime statistics. Foreign institutions are exempt from this requirement. Requires institutions to disclose in their annual security

report if the institution has agreements with State and local law enforcement agencies that include an understanding for the investigation of alleged criminal offenses.

Adds larceny-theft, simple assault, intimidation, destruction, damage, or vandalism of property to the list of crimes that must be reported as prejudice if the victim was intentionally selected because of the actual or perceived race, gender, religion, sexual orientation, ethnicity, or disability.

Requires institutions to include in their annual security report a statement of current campus policies regarding immediate emergency response and evacuation procedures that describe the process of notifying the campus community of an emergency or dangerous situation.

The annual security report must also include a description of the institution’s procedures to publicize emergency response and evacuation procedures to students and staff annually along with testing those procedures annually.

Requires ED to annually report information to the authorizing committees, permits ED to seek advice from the Attorney General, and prohibits retaliation, intimidation,



Item # Subject


citations]


*Effective Date


threats, discrimination against any individual with respect to the implementation of the requirements in this section.

96

School and Financial Assistance Information - Missing Person Procedures Bill Section: 488 HEA Section: 485(j)(1)

HEOA provides that institutions of higher education that provide on campus housing must establish procedures for notification to a contact person to be named by the student, if over 18, or to the parent, if under 18, if a student is missing for more than 24 hours. Also provides that the institution must develop policies for notification of college officials, including campus police, and local police in the event a student is missing for more than 24 hours.


97

School and Financial Assistance Information - Drug Violation Penalties Bill Section: 488 HEA Section: 485(k)(1) and (2)

Each institution must notify each student, upon enrollment, of the penalties under Section 484(r) (suspension from participation in any Title IV program for drug offenses for a time which is dependent on offense). Each institution is required to notify students who have lost eligibility for participation in Title IV programs under 484(r) and of the actions a student can take for early reinstatement as provided in Section 484(r)(2).


98

School and Financial Assistance Information - Entering Students Bill Section: 488 HEA Section: 485(a)(7)

Schools are required to distribute to students who are entering the institution the completion or graduation rates of full-time, undergraduate students who are seeking a certificate or degree, segmented by various statistically significant subgroups. Two-year schools will be aided by ED in fulfilling this requirement.

Date of enactment (August 14, 2008) for most schools, Academic year 2011-2012 for

two-year, degree granting

institutions


EXIT COUNSELING

Exit Counseling for Borrowers Bill Section: 488 HEA Section: 485(b)

HEOA Adds clarifying language that requires eligible schools to provide exit counseling to borrowers with federal loans. Consolidation and parent PLUS loans are excluded from this requirement.

August 14, 2008 Prior language required schools to make exit counseling “available” to borrowers. Per DCL GEN-08-12/FP-08-10, the



Item # Subject


citations]


*Effective Date


99

Mandates exit counseling for Grad PLUS students, and establishes a single counseling standard for both Stafford and Grad PLUS exit counseling. The following requirements are new:

o Exit counseling must include information on repayment plans available,

o a description of the different features of each

plan, o sample information showing the anticipated

monthly payments, and o the differences in interest paid and total

payments for each plan

Additional counseling must include: o an explanation that the borrower may prepay

each loan, o pay each loan on a shorter schedule, o change repayment plans, and o a general description about loan forgiveness

Exit counseling must also include:

o information about forbearance and deferment, o the consequences of defaulting on a loan

(including delinquent debt collection), o information on the effects of loan consolidation

(including at minimum the effects on total interest and fees to be paid, and length of repayment; the effects on underlying loan benefits, including grace periods, and forgiveness, cancellation, and deferment options; the option to prepay the loan or change repayment plans; and variation in borrower benefit programs among different lenders),

o a general description of the types of tax benefits that may be available, and

o a notice to borrowers about the availability of NSLDS

counseling must include: o information on repayment

plans which includes a description of the different features of each plan and samples showing average anticipated monthly payments with the difference in interest paid and total payments shown with each plan;

o debt management strategies to assist the borrower in repaying the debt;

o options the borrower has to prepay each loan or pay each loan on a compressed schedule or to change repayment plans;

o information on loan forgiveness and cancellation provisions and the conditions under which the borrower may obtain full or partial forgiveness or cancellation of principal and interest;

o information on forbearance provisions and a general description of terms and conditions under which the borrower may defer repayment of principal or interest or be granted forbearance;

o information on the consequences of default on a loan which includes adverse credit reports and Federal delinquent debt collection procedures and litigation;

o information with respect to Consolidation loans to

(DCL pages 96-97)



Item # Subject


citations]


*Effective Date


Exit counseling must include a copy of the information provided by ED under Section 485(d).

discharge FFEL, Direct Loan, and Perkins Loan program loans which includes: the effects of the

consolidation on total interest to be paid, fees, and length of repayment;

the effect on a borrower’s underlying loan benefits, which includes grace periods, loan forgiveness, cancellation and deferment;

the option the borrower has to prepay the loan or to change repayment plans; and

that borrower benefit programs may vary depending on the lender;

o a general description of the types of tax benefits that might be available to borrowers; and

o information on how a borrower can use NSLDS to get information on the status of their loans

TRANSFER OF CREDIT

100

Transfer of Credit Bill Section: 488(g) HEA Section: 485(h)(1)and (2)

HEOA adds a new provision requiring schools to publish in a readable and comprehensible manner its policies on acceptance of credits from other institutions, and shall include, at a minimum, established criteria used by the school and a list of schools with which the reporting school has an articulation agreement. ED or the National Advisory Committee on Institutional



Item # Subject


citations]


*Effective Date


Quality does not have the authority to dictate a school’s policy on transfer of credits and that it does not create a right of action on the part of a student to compel a school to accept transfer credit.

NOTICE TO STUDENTS

101

Notice to Students - Drug Violation Penalties Bill Section: 488(g) HEA Section: 485(k)(1)

Each school must notify each student, upon enrollment, of the penalties under Section 484(r ) - suspension from participation in any Title IV program for drug offenses for a time which is dependent on offense.


102

Notice to Students - Drug Violations Penalties Bill Section: 488(g) HEA Section: 485(k)(2)

Each school is required to notify students who have lost eligibility for participation in Title IV programs under 484(r ) and of the actions a student can take for early reinstatement as provided in Section 484(r )(2).


ENTRANCE COUNSELING

103

Entrance Counseling - Acknowledgement by Borrower Bill Section: 488(g) HEA Section: 485(l)(1)

HEOA provides that each school shall provide at or prior to first disbursement to first-time borrowers comprehensive, easy-to-read information on the terms and conditions of the loan and that the information may be provided during entrance counseling performed in person, on a separate written form that is signed by the borrower and returned, or online with borrower acknowledgement of receipt.


Entrance Counseling -

Permits a school to provide written counseling materials, either prior to or at the first disbursement of a loan, which

August 14, 2008 Entrance counseling requirement is added to statute (previously only required per



Item # Subject


citations]


*Effective Date


104

Requirements Bill Section: 488(g) HEA Section: 485(l)(2)

the borrower must sign and return. Electronic counseling must also require the borrower to acknowledge receipt of the online information. The below requirements are new: Effect of accepting the loan on eligibility for other

forms of financial aid Explanation of how interest accrues and is capitalized

if it is not paid Option to pay interest rather than allowing it to

capitalize School's definition of half-time enrollment during

regular and summer terms Consequences of not maintaining at least half-time

enrollment Importance of contacting the appropriate offices at the

school if the borrower withdraws Obligation to repay the full amount of the loan, even

if borrower does not complete the program within the regular completion time (current regulations also reference the borrower's obligation to repay even if she is unable to obtain employment upon completion or is otherwise dissatisfied with or does not receive the educational or other services that she expected.)

Likely consequences of default, including delinquent debt collection procedures (current regulations also reference adverse credit reports, federal offset, and litigation.)

Information on NSLDS and how the borrower can access loan records

Name and contact information for person to contact with questions about rights and responsibilities or the terms and conditions of the loan.

Also revises sample repayment information to provide such information based upon: A range of levels of indebtedness of

o Borrowers of subsidized or unsubsidized Stafford loans; and

regulations). Per DCL GEN-08-12/FP-08-10, Institutions must include the following information: o to the extent practicable, what the

effect of accepting the loan to be disbursed will have on the eligibility of the borrower for other forms of student aid;

o an explanation of the use of the master promissory note;

o information on how interest accrues and is capitalized during periods when the interest is not paid by the borrower or the Secretary;

o for Unsubsidized Stafford Loans or PLUS Loans made under the FFEL or Direct Loan programs, the option of the borrower to pay the interest while in school;

o the definition of half-time enrollment at the institution, during regular terms and summer school, and the consequences of not maintaining half-time enrollment;

o an explanation of the importance of contacting the appropriate offices at the institutions if the borrower withdraws prior to completing the program of study so the institution can provide exit counseling, including information regarding the borrower’s repayment options and loan consolidation;

o examples of monthly repayment amounts based on a range of level of indebtedness of borrowers of loans under section 428 or 428H of the HEA and, as appropriate, graduate borrowers of loans under section 428, 428B or



Item # Subject


citations]


*Effective Date


o As appropriate, graduate borrowers of unsubsidized Stafford loans or Grad PLUS loans; or

The average cumulative indebtedness of other borrowers in the same program as the borrower, at the same school

428H of the HEA, or the average cumulative indebtedness of other borrowers in the same programs as the borrower at the same institution;

o the obligation of the borrower to repay the full amount of the loan, regardless of whether the borrower completes the program in which the borrower is enrolled within the regular time for completion;

o the likely consequences of default on the loan, including adverse credit reports, delinquent debt collection procedures under Federal law, and litigation;

o information on the NSLDS and how the borrower may access their records; and

o the name and contact information of the individual a borrower can contact with questions regarding the borrower’s rights and responsibilities for the terms and conditions of the loan

NSLDS DISCLOSURES

105

NSLDS Disclosure - to Borrowers Bill Section: 489(3) HEA Section: 485B(d)(4)

ED is to require guaranty agencies, eligible lenders, and eligible institutions of higher education that enter into agreements with a potential student, student, or parent of such student regarding a loan to inform the student or parent that the loan shall be: Submitted to NSLDS; Accessible to guaranty agencies, lenders, and

institutions of higher education determined to be authorized users by ED.


TRUTH IN LENDING DISCLOSURE

Truth in Lending The school is required, upon request of a student for a Subject to Section 140 of the TILA: the term “private DCL GEN-08-12/


Item # Subject


citations]


*Effective Date


106

Disclosure – Private Loan Bill Section: 493(a) HEA Section: 487(a)(28)

private education loan, to provide the new Truth in Lending Act (TILA) disclosure form and the information required to complete the form, to the extent the school has the information. Specifies that “private education loan” has the meaning given in Section 140 of TILA.

regulation by the Federal Reserve

Board in consultation with the Secretary of

Education

education loan”— (A) means a loan provided by a private educational lender that— (i) is not made, insured, or guaranteed under of Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); and (ii) is issued expressly for postsecondary educational expenses to a borrower, regardless of whether the loan is provided through the educational institution that the subject student attends or directly to the borrower from the private educational lender; and (B) does not include an extension of credit under an open end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling

FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 71-72)

90-10 RULE

107

90/10 Rule - Proprietary Schools Bill Section: 102 HEA Section: 102(b) (1)(F)

The 90/10 rule has been moved to Section 493 of the HEA.


108

90-10 Rule Bill Section: 493(a) HEA Section: 487(a)(24)

HEOA provides that a proprietary school must derive not less than 10% of its revenue from sources other than Title IV funds as that amount is calculated in accordance with new accounting provisions or be subject to sanctions.


109

90-10 Rule - Calculations Bill Section: 493(c )(2)

In making 90-10 rule calculations, proprietary school shall use cash basis of accounting except for loans made by a proprietary school on or after July 1, 2008, and prior to July 1, 2012.

August 14, 2008



Item # Subject


citations]


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HEA Section: 487(d)(1)(A)

enactment of the HEOA - (DCL pages 68-69)

110

90-10 Rule – Calculations for Revenue Bill Section: 493(c )(2) HEA Section: 487(d)(1)(B)

In making 90-10 rule calculations, proprietary school shall consider as revenue only those funds generated from: (i) tuition, fees, and institutional charges for enrollment in

programs eligible for Title IV aid and (ii) activities conducted by the school that are necessary for

education and training of students if activities are: Conducted on campus or a campus controlled facility; Performed by the institution’s faculty; and Required for all students in a particular program of

study and (iii) funds paid by a student, or on behalf of the student by

someone other than the school, for an education or training program that is not eligible for Title IV aid, if the program is: Approved or licensed by the State; Is accredited by an accrediting agency recognized by

ED; or Provides an industry-recognized credential or

certification.


111

90-10 Rule – Calculations of Non-Title IV Revenue Requirement Bill Section: 493(c )(2) HEA Section: 487(d)(1)(C )

In making 90-10 rule calculations, proprietary school shall presume that any funds received under Title IV for or on behalf of a student will be used for tuition, fees and other institutional charges, regardless of whether these funds are credited to the student’s account with the school or paid directly to the student, except to the extent the tuition, fees and other institutional charges are paid by: Non federal grant funds paid by other public agencies or

private sources; Funds provided under a contract with a Federal, State, or

local government agency for job-training for low-income persons in need of the training

Funds used by a student from college savings plans approved for special tax treatment under Internal Revenue Code

Institutional scholarships


90-10 Rule - Calculations Under

In making 90-10 Rule calculations, proprietary school shall include institutional aid as revenue to the school

August 14, 2008 DCL GEN-08-12/ FP-08-10: Contains information on


Item # Subject


citations]


*Effective Date


112

Non-Title IV Revenue Requirements Bill Section: 493(c )(2) HEA Section: 487(d)(1)(D)(i)

only as follows: for loans made by the school on or after July 1, 2008 and prior to July 1, 2012, only loan payments received during the institutional fiscal year accounted for on an accrual basis and estimated in accordance with generally accepted accounting principles (GAAP) if the loans:

Are evidenced by enforceable promissory notes; Are issued at intervals related to the school’s

enrollment periods; and are subject to regular loan repayments and collections.


113

90-10 Rule - Calculations Under Non-Title IV Revenue Requirements Bill Section: 493(c )(2) HEA Section: 487(d)(1)(D)(ii) and iii)

In making 90-10 rule calculations, proprietary school shall include institutional aid as revenue to the school only as follows, in the case of scholarships provided by the school:

only those scholarships in the form of monetary or tuition discounts based on academics or financial need disbursed from an established restricted account,

only to the extent that funds in the account represent designated funds from an outside source or from income earned on those funds


114

90-10 Rule - Calculations Under Non-Title IV Revenue Requirement Bill Section: 493(c )(2) HEA Section: 487(d)(1)(E)

In making 90-10 rule calculations, proprietary school shall treat overawards of unsubsidized Stafford loans (Direct or FFELP) received by a student on or after July 1, 2008, and prior to July 1, 2011, as revenue received by the school from sources other than funds received under Title IV. Overawards are to be determined using the loan limit prior to effective date of ECASLA.

Applies to any unsubsidized Stafford loan received by a

student on or after July 1, 2008, but

before July 1, 2011


115

90-10 Rule - Exclusions from Revenue Calculations Bill Section: 493(c )(2) HEA Section: 487(d)(1)(F)

In making 90-10 rule calculations, proprietary school shall exclude the following from revenues:

The amount of funds received for federal work study unless those funds were used to pay student’s institutional charges;

The amount of LEAP funds received; The amount of funds provided by the institution

as part of Title IV matching funds; The amount of Title IV funds that are required

to be refunded or returned; and




Item # Subject


citations]


*Effective Date


The amount charged for books, supplies, and equipment, unless the institution includes that amount as tuition, fees, or other institutional charges.

116

90-10 Rule - Sanctions Bill Section: 493(c )(2) HEA Section: 487(d)(2)(A) and (B)

HEOA provides that if the proprietary institution fails to meet the 90-10 rule requirements:

For two consecutive institutional years, it is ineligible to participate in Title IV for a minimum of 2 institutional fiscal years. To regain eligibility, the school must demonstrate compliance with all eligibility and certification requirements of HEA Section 498 (Eligibility and Certification Procedures) for a minimum of 2 fiscal years after the fiscal year in which the school became ineligible.

For one institutional fiscal year, the institution’s eligibility becomes provisional for the following two institutional fiscal years, except that the provisional eligibility shall terminate on the expiration of the school’s participation agreement that is in effect at the time of the failure to meet 90-10 rule requirements or on the date ED determines that the institution is determined ineligible if the institution fails to meet 90-10 rule requirements for 2 consecutive institutional fiscal years.


117

90-10 Rule – List of Sanctioned Schools Bill Section: 493(c )(2) HEA Section: 487(d)(3)

ED shall publicly disclose on the College Navigator Website the identity of any proprietary school that fails to meet 90-10 rule requirements and the extent to which the school failed to meet the requirement.


118

90-10 Rule - Statistics Bill Section: 493(c )(2) HEA Section: 487(d)(4)

ED is to report to the authorizing committees by July 1, 2009, and by each July 1 thereafter, for each proprietary school authorized to receive Title IV funds, the amount and percentage of such school’s revenues received from sources other than Title IV and the amount and percentage of such school’s revenues received from Title IV.

Report by July 1, 2009

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 68, 188, and 199)

SCHOOL CODE OF CONDUCT

Code of Conduct – Each school and each school-affiliated organization that August 14, 2008 DCL GEN-08-12/


Item # Subject


citations]


*Effective Date


119

General Bill Section: 120 HEA Section: 153(c )(3)(A)

has a preferred lender arrangement must comply with the Code of Conduct requirements [HEA Section 487(a)(25)].

FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 69-70)

120

Applicable Code of Conduct Bill Section: 120 HEA Section: 153(c)(3)(B)

A school-affiliated organization must: comply with its Code of Conduct developed and

published by the school [HEA Section 487(a)(25)];

if the institution has a Website, publish its Code of Conduct prominently on the Website; and

administer and enforce its Code of Conduct by, at a minimum, requiring that all of the organization’s agents with responsibilities with respect to education loans be informed annually of the provisions of the code of conduct


121

School Code of Conduct Bill Section: 493(a) HEA Section: 487(a)(25)(A)-(C)

HEOA codifies requirement that schools participating in Title IV loan programs must develop a code of conduct with respect to loans to which the institution’s officers, employees, and agents shall comply that:

Prohibits conflict of interest with the responsibility of the officer, employee, or agent, and

At a minimum, includes provisions already mentioned in the HEA.

Ensures it is published prominently on the school’s Website,

Require all officers, employees and agents are informed of the code annually


School Code of Conduct Bill Section: 493 HEA Section: 487(e)

A school’s code of conduct shall include the following requirements:

Ban on Revenue-Sharing Arrangements – A school shall not enter into a revenue-sharing arrangement, which is any arrangement between a school and a Title IV lender where the lender pays a fee or provides other material benefits to



Item # Subject


citations]


*Effective Date


122

the school or its officers, employees or agents in exchange for the school recommending the lender to its students, with any lender.

Gift Ban – Any school officer, employee or

agent with responsibilities with respect to education loans or financial aid is prohibited from requesting or receiving gifts from lenders, guarantors or loan servicers. A gift is any item or service having a monetary value or more than a de minimus amount.

Exceptions include the following:

materials or services related to loan issues, default aversion and prevention, or financial literacy;

expenses integrally related to training designed to improve service to the school and contribute to professional development;

favorable loan conditions provided to students employed by the school if the same conditions provided to all other students at the school;

entrance and exit counseling services controlled by school staff and that do not promote a specific lender;

contributions from a lender, guarantor or servicer made to a school that are philanthropic, unrelated to education loans or are not made in exchange for an advantage related to education loans;

education grants, scholarships or financial aid administered by or on behalf of a state

Gifts to Family Members – Gifts to family

members and others with relationships to school employees, officers, and agents shall be


Item # Subject


citations]


*Effective Date


considered gifts to said employees, officers and agents if they know about the gift and believe the gift was based on the position of the employee, officer or agent.

Contracting Arrangements Prohibited – A school officer, employee or agent with responsibilities with respect to education loans or financial aid is prohibited from receiving financial benefit from a lender or lender affiliate as compensation for any consulting or services provided to or for a lender.

123

School Code of Conduct Bill Section: 493 HEA Section: 487(e)

A school’s code of conduct shall include the following requirements:

Interaction With Borrowers – A school shall not assign a loan from a first-time borrower to a particular lender or delay or refuse to certify a loan based on the borrower’s choice of lender or guarantor.

Prohibition on Offers of Funds for Private

Loans – A school shall not request or receive an offer of funds from a lender for private education loans including funds for opportunity pool loans to its students in exchange for concessions or promises to the lender regarding the number or volume of Title IV loans made by said lender or a preferred lender status for such loans.

Ban on Staffing Assistance – A school shall not

request or accept assistance from a lender for call center or financial aid office staffing. A school can receive assistance for FAA training;



Item # Subject


citations]


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lender identified educational materials for borrowers, and short-term non-recurring staffing assistance during emergencies.

Advisory Board Compensation – Any school

employee with responsibilities with respect to education loans or financial aid who serves on an advisory group established by a lender, guarantor or group of lenders or guarantors may only receive reimbursement for reasonable expenses related to serving in group.

124

School Code of Conduct - Violations Published Bill Section: 493 HEA Section: 487(g)

The Office of Inspector General of the Department will submit and publish through the Department’s Website an annual report identifying all substantiated gift ban violations in a school’s code of conduct.

PREFERRED LENDER ARRANGEMENTS

125

Definition – Agent Bill Section: 120 HEA Section: 151(1)

New Definition An officer or employee of a school or school-affiliated organization.


126

Definition - Covered Institution Bill Section: 120 HEA Section: 151(2)

New Definition Any school (defined in HEA Section 102) that receives any federal funding or assistance.


Definition - Education Loan Bill Section: 120

New Definition Education loans are:

August 14, 2008 Education loan has an exception when used as part of the term private education loan.



Item # Subject


citations]


*Effective Date


127 HEA Section: 151(3)

FFELP loans, or Direct loans, or

A private education loan.


128

Definition - Eligible Lender Bill Section: 120 HEA Section: 151(4)

New Definition Eligible lender has the same meaning given such a term in HEA Section 435(d).

129

Definition - Institution-Affiliated Organization Bill Section: 120 HEA Section: 151(5)

New Definition Any organization that is:

Directly or indirectly related to a covered institution; and

Is engaged in the practice of recommending, promoting, or endorsing education loans for students attending such covered institution or the families of such students.

Such organizations may include an alumni organization, athletic organization, foundation, or social, academic, or professional organization, of a covered institution, but excludes lenders with respect to any education loan secured, made or extended by such lender.


130

Definition - Lender Bill Section: 120 HEA Section: 151(6)

New Definition Except as used as part of the term eligible lender or private educational lender means:

An eligible lender for FFEL loans, ED for Direct Loans, and A private education lender as defined in Section

140 of the Truth in Lending Act (TILA) for a private education loan.

The definition also includes any other person engaged in the business of security, making, or extending education loans on behalf of the lender.

August 14, 2008 Section 140 of the TILA: the term “private education loan”— (A) means a loan provided by a private educational lender that—

(i) is not made, insured, or guaranteed under of Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); and (ii) is issued expressly for postsecondary educational expenses to a borrower, regardless of whether the loan is provided through the educational institution that the subject student attends or directly to the borrower from the private educational lender; and



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(B) does not include an extension of credit under an open end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling

131

Definition - Officer Bill Section: 120 HEA Section: 151(7)

New Definition Includes a director or a trustee of a covered institution or institution-affiliated organization if such individual is treated as their employee.


132

Definition - Preferred Lender Arrangement Bill Section: 120 HEA Section: 151(8)

New Definition An arrangement or agreement between a lender and a covered institution or an institution-affiliated organization— Under which a lender provides or issues education

loans to students for attendance at the covered institution, or to their families, and

Involves the school or school-affiliated organization recommending, promoting, or endorsing the lender’s education loans.

Does not include: Arrangements or agreements regarding

Direct Loans or Arrangements or agreements regarding

Federal PLUS Loan made under the pilot auction program are excluded.


133

Definition - Private Education Loan Bill Section: 120 HEA Section: 151(9)

Private education loan has the same meaning given the term in Section 140 of the Truth in Lending Act (TILA).

August 14, 2008 Section 140 of the TILA: the term “private education loan”— (A) means a loan provided by a private educational lender that—

(i) is not made, insured, or guaranteed under Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); and (ii) is issued expressly for



Item # Subject


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*Effective Date


postsecondary educational expenses to a borrower, regardless of whether the loan is provided through the educational institution that the subject student attends or directly to the borrower from the private educational lender; and

(B) does not include an extension of credit under an open end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling

134

Preferred Lender Arrangement Disclosures - FFELP loans Bill Section: 120 HEA Section: 152(a)(1)(A)

New section of Law A school, or a school-affiliated organization, that participates in a preferred lender arrangement must disclose (in addition to the annual list of lenders to be provided to students and families), on the school’s Website and in all informational materials that describe or discuss education loans—

the maximum amount of Federal grant and loan aid under Title IV available to students, in an easy to understandable format;

the information required to be disclosed for each type of loan that is offered; and

statement that the school is required to process the documents required to obtain a FFELP loan from any eligible lender the student selects


Preferred Lender Arrangement Disclosure - Private Education Loans Bill Section: 120 HEA Section: 152(a)(1)(A)

A school, or a school-affiliated organization, that participates in a preferred lender arrangement must disclose (in addition to the annual list of lenders to be provided to students and families), –

on the school’s Website and in all informational materials that describe or discuss education loans

Information the Board of Governors of the Federal Reserve System will require:

No later than 18 months after the

date of enactment (February 14,

2010)



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*Effective Date


135 in the case of a covered institution, the information that the Board of Governors of the Federal Reserve System requires to be disclosed under Section 128(e)(11) of the Truth in Lending Act [15 U.S.C. 1638(e)(11)], for each type of private education loan offered pursuant to a preferred lender arrangement of the institution to students of the institution or the families of such students; and

in the case of a school-affiliated

organization of a covered institution, the information the Board of Governors of the Federal Reserve System requires to be disclosed under Section 128(e)(1) of the Truth in Lending Act [15 U.S.C. 1638(e)(1)] for each type of private education loan offered pursuant to a preferred lender arrangement of the organization to students of such institution or the families of such students.

136

Private Education Loan Disclosures by Schools Bill Section: 120 HEA Section: 152(a)(1)(B)

A school, or school-affiliated organization, that provides information regarding a private education loan from a lender to a prospective borrower must—

provide the prospective borrower with the information the Board of Governors of the Federal Reserve System requires for a private loan

inform the prospective borrower that— o may qualify for loans or other

assistance under Title IV; and o the terms and conditions of loans

made, insured, or guaranteed under Title IV may be more favorable than the provisions of private education loans; and

o ensure that information on private loans is distinct from information



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citations]


*Effective Date


Title IV loans

137

Informational Materials Bill Section: 120 HEA Section: 152(a)(1)(C)

The informational materials regarding preferred lender relationships and private loans are publications, mailings, or electronic messages or materials that—

are distributed to prospective or current students of a school and their families; and

describe or discuss the financial aid opportunities available to students at the school


138

Use of Institution Name Bill Section: 120 HEA Section: 152(a)(2)

A school, or a school-affiliated organization, that enters into a preferred lender arrangement with a lender regarding private education loans cannot agree to the lender’s use of the name, emblem, mascot, or logo of the school or organization, or use of other words, pictures, or symbols readily identified with the school or organization, in the marketing of private education loans to students attending the school in any way that implies that the loan is offered or made by the school or organization and not the lender.


139

Use of Lender Name Bill Section: 120 HEA Section: 152(a)(3)

A covered institution or institution-affiliated organization must ensure that the name of the lender is displayed in all information and documentation related to private education loans under a preferred lender arrangement.


140

Disclosures by Lenders to Borrowers – FFEL and DL Bill Section: 120 HEA Section: 152(b)(1)(A)(i)

For each FFELP or DL loan (other than a Consolidation loan), at or prior to the time the lender disburses the loan, the lender must provide the borrower in writing (including through electronic means), with a FFELP Disclosure and Plain Language Disclosure [disclosures described in HEA Section 433(a) and (c)].

August 14, 2008

No change from current law. DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 42)

141

Disclosure by Lenders to Borrowers - Private Education Loans

Private Education Loans - For each of a lender’s private education loans, the lender must comply with the disclosure requirements under the Truth in Lending Act [Section 128(e), see Title X].

No later than 18 months after date

of enactment (February 10,

2010)

Subject to regulation by the Board of Governors of the Federal Reserve System



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Bill Section: 120 HEA Section: 152(b)(1)(A)(ii)

142

Disclosure by Lenders to ED – Bill Section: 120 HEA Section: 152(b)(1)(B)

In general - Each FFELP lender must report annually to ED: any reasonable expenses paid or provided to any

agent of a school who— o is employed in the financial aid office of a

covered institution; or o otherwise has responsibilities with respect to

education loans or other financial aid of the institution; and

any similar expenses paid or provided to any agent of an school-affiliated organization who is involved in the practice of recommending, promoting, or endorsing education loans

Contents of reports – Each report will include—

the amount for each specific instance in which the lender provided such expenses;

the name of any agent to whom the expenses were paid or provided;

the dates of the activity for which the expenses were paid or provided; and

a brief description of the activity for which the expenses were paid or provided



2010)


143

Annual Certification by Lenders Bill Section: 120 HEA Section: 152(b)(2)

Each FFELP lender that participates in one or more preferred lender arrangements must:

Certify their compliance with the requirements of this Act; and

If an audit of a lender is required, the lender’s compliance with the requirements under this section must be reported on and attested to annually by the auditor of such lender.

Annual certification no

later than 18 months after date


2010)


144

Determination of Minimum Information Disclosure Bill Section: 120

ED in coordination with the Board of Governors of the Federal Reserve System, and in consultation with representatives of covered institutions, institution-affiliated organization, high school counselors, lenders, loans servicers, and guaranty agencies, must determine the minimum information to be made available for FFEL



2010)

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA- (DCL page 39)


Item # Subject


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*Effective Date


HEA Section: 153(a)(1)(A) & (B)(i)

loans under a preferred lender arrangement. Such information is to be provided by the covered institutions, institution-affiliated organizations, and lenders in such arrangements. The minimum information must include information required under the Truth in Lending Act, modified as necessary to apply to FFELP loans.

145

Content of Minimum Information Disclosure Bill Section: 120 HEA Section: 153(a)(1)(B)(ii) and (iii)

In determining the content to be provided under preferred lender arrangements, ED must include the information that the Board of Governors of the Federal Reserve System requires to be disclosed under Section 128(e)(1) of the Truth in Lending Act, modified as necessary for student loans; and must assess the merits of providing:

Interest rate and terms and conditions of a loan for the next award year, including loan forgiveness and deferment;

Information on charges, such as origination and Federal Default fees, and how those charges are to be deducted, remitted, or paid by the lender;

Annual and aggregate maximums; Average amounts borrowed from the lender for

students who graduated from the institution in the prior year with a certificate, undergraduate degree, or graduate or professional degree, as applicable;

Average interest the borrower may pay in interest under a standard repayment plan, specified for subsidized Stafford Loans, distinguished between unsubsidized Stafford Loans, and Graduate PLUS Loans for those who pay interest while in school and those who do not (whose interest is capitalized);

Consequences of default and limitations of bankruptcy discharges for education loans;

Contact information for the lender; and Other information suggested by those with

whom ED consulted



2010)


Note: This summary is intended for informational purposes only. Refer to the bill for specific information.Draft – OGSLP Last Updated June 19, 2009

of 103

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146

Model Form Bill Section: 120 HEA Section: 153(a)(2)(A)

ED shall require covered institutions and institution-affiliated organizations to disclose the information determined with the Board of Governors of the Federal Reserved System and after consultation with the public for FFEL loans offered under preferred lender arrangements. ED must develop a model form for the disclosure, but the institutions and organization may use a form of their own design. The model must be easily usable by students, families, institutions, institution-affiliated organizations, lenders, loans servicers, and guaranty agencies. The model must also be similar in design to the form developed by the Board of Governors of the Federal Reserve System under Section 128(e)(1) and (5)(A) for easy comparison of FFEL and private education loans.


147

Model Disclosure Form Bill Section: 120 HEA Section: 153(a)(2)(B)

ED must develop a model disclosure form containing the minimum disclosure information which may be used by institutions, institution-affiliated organizations, and preferred lenders. The form must be in a format that is easily usable by students, families, institutions, institution-affiliated organizations, lenders, loan servicers, and guaranty agencies. The form must be similar in format to the form developed by the Federal Reserve under the Truth in Lending Act in order to permit students and their families to easily compare FFELP and private education loans. The model form must be updated periodically, as necessary.


148

Lender Reporting of Required Minimum Disclosures Bill Section: 120 HEA Section: 153(b)

On an annual basis, each lender must provide the covered institution and each institution-affiliated organization with the information necessary for them to make the required disclosures for FFEL loan offered under a preferred lender arrangement for the next award year by a due date established by ED.

Annually on a date determined by ED


Providing Information to Students and

Schools and school-affiliated organizations that have preferred lender arrangements must provide the following information to students (or the families of students)


for informational purposes only. Refer to the bill for specific information. of 103 Draft – OGSLP Last Updated June 19, 2009

Note: This summary is intended

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149 Families Bill Section: 120 HEA Section: 153(c )(1)(A)

attending each school: the information that ED requires per the Minimum

Disclosure Requirements, for each type of education loan (FFELP, DL, private education loans

in the case of schools, the information that the Board of Governors of the Federal Reserve System requires to be disclosed under the Truth in Lending Act;

in the case of a school-affiliated organization, the information the Board of Governors of the Federal Reserve System requires to be disclosed under the Truth in Lending Act


150

Timely Provision of Information Bill Section: 120 HEA Section: 153(c )(1)(B)

The information provided to students or the families of students must be in a manner that allows the student or the student’s family to take the information into account before selecting a lender or applying for an education loan.


151

Annual Report Bill Section: 120 HEA Section: 153( c)(2)(A)

Schools and school-affiliated organizations that have preferred lender arrangements must prepare and submit to ED, an annual report that includes:

the information provided to Students and Families [HEA Section 153(c )(1)(A)]

a detailed explanation of why the school or school-affiliated organization entered into a preferred lender arrangement with the lender, including why the terms, conditions, and provisions of each type of education loan provided are beneficial for students or the families of students attending the institution.

ED will determine when the report is

due


152

Availability of the Report Bill Section: 120 HEA Section: 153( c )(2)(B)

Ensure that the Annual report sent to ED is made available to the public and provided to students or the families of the students attending or planning to attend the covered institution.


153

Code of Conduct Bill Section: 120 HEA Section: 153(c)(3)

Covered institutions and each institution-affiliated organization under a preferred lender arrangement must comply with the code of conduct requirement in Section 487(a)(25)(A) through (C). The institution-affiliated organization must comply with the code of conduct developed and published by the covered institution, publish the code of conduct prominently on its Website if



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it has a Website, and enforce the code of conduct with its agents who are to be annually informed of the code.

154

Disclosure and Model Form for Direct Loans Bill Section: 120 HEA Section: 154

ED must provide each institution participating in the Direct Loan program with a completed model disclosure form including the same information as determined for FFEL loans. The Direct Loan institution must make information available to prospective and continuing students and their families as applicable. If the Direct Loan institution provides information on private education loans to prospective borrower, it must provide concurrently provide the Direct Loan disclosure information. The institution may use a comparable form to the model form provided by ED.

Not later than 180 days after the

development of a model form for

FFEL loans


155

Preferred Lender Arrangements - Schools Bill Section: 493(a) HEA Section: 487(a)(27)

Schools that have entered a preferred lender arrangement, must annually compile, maintain, and make available to students (and families) attending the school a list of lenders for Title IV or private loans that the school promotes, recommends, endorses in accordance with the arrangement. Lenders are to comply with HEA Section 487(h) in compiling the list.

August 14, 2008 DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA (DCL page 71)

156

Preferred Lender Lists - Schools Bill Section: 493 HEA Section: 487(h)

Preferred Lender List Requirements – In addition to what is required per Section 153(a)(2)(A), a school must fully disclose the reason for including the lender, especially borrower terms and benefits, and a statement that the student or student’s family does not have to choose a lender on the list. The list for federal loans must include at least three unaffiliated lenders, and a list for private education loans must include at least two unaffiliated lenders. The list must disclose the details of any affiliations between any of the lenders on the list. The school must disclose the method and criteria for selecting lenders with the most beneficial terms to the borrowers including:



Item # Subject


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*Effective Date


Payment of loan fees for borrower, Competitive interest rates or terms, Quality servicing, or Additional benefits beyond the standard terms.

The school shall exercise care in preparing the list without prejudice and with the sole benefit of the borrowers in mind. The school shall not deny the borrower’s right to choose a lender not on the list nor shall the school delay certification because the borrower chose a different lender. The Department of Education shall maintain an updated list of all eligible lenders and their affiliates for the use of schools in preparing preferred lender lists. Schools shall use the most recent list available from the Department.

157

Affiliate Definition Bill Section: 493 HEA Section: 487(i)

An affiliate is defined as an entity that controls, is controlled by, or under common control with another entity. Criteria is met if:

(a) The entity directly or indirectly owns, controls, or has the power to vote 5% of the voting securities of the other entity,

(b) Controls in any manner the election of a majority of directors or trustees of the other entity, or

(c) ED (after a possible hearing) determines that the entity has a controlling interest over the management or policies of the other entity’s education loans.

EXPERIMENTAL SITES

158

Experimental Sites – Regulatory Improvement and Streamlining Experiments Bill Section: 494 HEA Section: 487A(b)

Any experimental site in existence as of July 1, 2007 is allowed to continue unless deemed unsuccessful by ED. Any previously approved activities that have not been successful shall be discontinued by June 30, 2009. ED shall continue to report every two years to the authorizing committees. ED is authorized to select new institutions as experimental sites without consulting with




Item # Subject


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the authorizing committees. Title IV Student Assistance - Part H -Program Integrity

TEACH OUT

159

Teach-Out Plan Bill Section: 493 HEA Section: 487(f)

Requires a school to provide a Teach-Out plan to its accrediting organization if the institute is under limitation, suspension or termination by the Department of Education. A Teach-Out Plan is a written plan that provides for fair treatment of students if the school closes before the students have completed their programs of study.


160

Closed School Location used as Teach-Out Bill Section: 496 HEA Section: 498

Allows a location of a closed institution to be used as an additional location for the purposes of a teach-out, if the teach-out has been approved by the institution’s accrediting agency and permits an institution that conducts a teach-out by establishing an additional location at a closed institution to establish a permanent location at the closed institution.


Title IV Student Assistance - Part I -Competitive Loan Auction Pilot Program

COMPETITIVE LOAN AUCTION PILOT PROGRAM

161

Competitive Loan Auction Pilot Program – PLUS Loans Bill Section: 499 HEA Section: 499(b)(3)(B)

Adds requirement to the prequalification process in order for lenders to participate. Lenders must commit that if they have a winning bid, the lender will enter into agreements with Secretary regarding the terms of the auction program.


162

Competitive Auction Pilot Program – PLUS Loans - Winning Bidder Penalties Bill Section: 499

The first part of the terms of the agreement between ED and the lender is the same as current College Cost Reduction and Access Act (CCRAA) statute. New requirement - If the lender wins the bid and fails to enter into agreements or fails to comply with agreements, the following sanctions could apply:

1. Penalty in the amount of additional costs to ED


for informational purposes only. Refer to the bill for specific information. of 103 Draft – OGSLP Last Updated June 19, 2009

Note: This summary is intended

Item # Subject


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*Effective Date


HEA Section: 499(b)(3)(G)

in obtaining another eligible PLUS lender (this includes the increase in special allowance payments). The penalty could be assessed by:

Reducing payments otherwise due from ED, or

Reducing payments due that lender from any other federal agency, pursuant to Section 3716 of Title 31

2. Prohibiting the lender from bidding in other auctions under this section

3. Limitation, suspension, or termination of the lender’s participation in FFELP loan program

4. Any other enforcement action ED is authorized to take under FFELP.

163

Competitive Auction Pilot Program – PLUS Loans - Loans with 100% Insurance. Bill Section: 499 HEA Section: 499(b)(3)(J)

Federal PLUS loans guaranteed by a FFEL Program guarantor. Verbiage added that the insurance is subject to Section 428(b)(1)(G) which adds the 100% insurance on exempt claims and lender of last resort. Otherwise, insurance on loans in the competitive auction pilot program is 99% reinsurance.

July 1, 2009 Insurance on loans is 99% except for exempt claims (100%) and Lender of Resort (100%).


164

Competitive Auction Pilot Program - PLUS Loans - Required Initial Evaluation Bill Section: 499 HEA Section: 499(c)

Requires that ED and the Secretary of Treasury to jointly conduct (in consultation with OMB, CBO and Comptroller General) an evaluation of the pilot program to determine the following six items:

1. Extent of savings generated via the Pilot vs. operating the PLUS program under Title IV Part B

2. Number of lenders that participated and the extent the pilot generated competition

3. Number and volume of loans made under the pilot in each state

4. Effect of the transition to and operation of the pilot in the ability of lenders and schools to originate loans smoothly and efficiently

5. Differential impact of the auction among the states, including between rural and non-rural


ded for informational purposes only. Refer to the bill for specific information. of 103 Draft – OGSLP Last Updated June 19, 2009

Note: This summary is inten

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states, and 6. Feasibility of using this mechanism to

operate other Title IV Part B loan programs.

165

Competitive Auction Pilot Program – PLUS Loans - Report by ED Bill Section: 499 HEA Section: 499(d)

ED and the Secretary of the Treasury must submit to the authorizing committees not later than:

9/1/2010 a preliminary report of the findings in the initial evaluation findings

9/1/2012 an interim report of findings 9/1/2013 a final report of findings

Included in each of these three reports will be ED’s recommendations for:

Improving the operation and administration of the auction, and

Improving the operation and administration of other Title IV Part B loan programs


TITLE I General Provisions - Part A - Definitions

INSTITUTION OF HIGHER EDUCATION

166

General Definition of Institution of Higher Education Bill Section: 101 HEA Section: 101(a)(1), 101(a)(3), and 101(b)(2)

Institution of Higher Education includes: Institutions that admit as regular students,

students that have completed a secondary school education in a home school setting that is treated as a home school or private school under state law.

Institutions that could award a degree that is acceptable for admission to a graduate or professional degree program, subject to review and approval by ED.

Institutions who admit individuals who will be dually or concurrently enrolled in the institution and a secondary school.


PROPRIETARY SCHOOL

Proprietary School Proprietary institution of higher education definition: July 1, 2010 DCL GEN-08-12/


Item # Subject


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*Effective Date


167

Definition Bill Section: 102 HEA Section: 102 (a) (2)(b)(A)

provides an eligible program of training that leads to gainful employment in a recognized occupation, or

provides a program leading to a BA in liberal arts and has provided such a program since 1/1/09 and is accredited by an accreditation agency or association and has continuously been accredited since 10/1/07

FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 23)

168

Proprietary School Definition Bill Section: 102 HEA Section: 102 (b)(2)(B)

Definition of a proprietary institution of higher education includes schools in any state who admit as regular students, individuals who will be dually or concurrently enrolled in the institution and a secondary school.


POST SECONDARY VOCATIONAL INSTITUTION

169

Post Secondary Vocational Institution Definition Bill Section: 102 HEA Section: 102 (c)(2)(B)

The term post secondary vocational institution admits as regular students, individuals who will be dually or concurrently enrolled in the institution and a secondary school.


Title I General Provisions - Part C – Cost of Higher Education

COLLEGE NAVIGATOR WEBSITE

170

Definition - College Navigator Website Bill Section: 111 HEA Section: 132(a)

College Navigator Website as defined in Section 132 of the HEA which is operated by ED and includes any successor Website


College Navigator Website - Lists Bill Section: 111

Using the “College Navigator” Website, ED will provide lists that will be sortable and searchable by state and by the following categories of institutions of higher education participating in Title IV programs:

Four-year public

July 1, 2011 DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA -


Item # Subject


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171

HEA Section: 132 (c) and (d)

Four-year private, non profit Four-year private, for profit Two-year public Two-year private, non-profit Two-year private, for-profit Less than two-year public Less than two-year private, non-profit Less than two-year private, for profit

A list of the five percent of institutions in each category in

subsection (d) that have the highest tuition and fees for the most recent academic year for which data is available.

A list of the five percent of institutions in each category that have the highest net price for the most recent academic year for which data is available.

A list of the five percent of institutions in each category that have the largest increase, expressed as a percentage of change, in tuition and fees over the most recent three academic years in which data is available. The first academic year of the three year period will be used as the base year to calculate the percentage change.

A list of the five percent of institutions with the largest increase, as a percentage change, in net price over the three most recent academic years for which data is available. The first academic year of the three year period to be used as the base year of the three year period to compute the percentage change.

A list of ten percent of institutions that have the lowest tuition and fees in the most recent academic year that data is available.

A list of ten percent of institutions that have the lowest net price for the most recent academic year for which data are available.

(DCL pages 31-32)

College Navigator Website – State Higher Education Spending Report Bill Section: 111

ED will report annually, through its College Navigator Website, increases to the percentage change in:

Spending by state for full time students for each of the five most recent preceding academic years

Percentage change in average tuition and fees

Annually after August 14, 2008



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*Effective Date


172 HEA Section: 132(g) for all public institutions in each state for the five most recent preceding years.

Percentage change in total amount of need and merit based aid provided by each state to full time students enrolled in the state for each of the five preceding academic years.

173

College Navigator Website - Consumer Information Regarding Schools Bill Section: 111 HEA Section: 132(i)(1)(A-Z)

ED will provide data on its College Navigator Website about each institution that participates in Title IV for the most recent academic year which will inform student’s and their families with the institutions:

Mission number of undergraduate students who applied,

were admitted and enrolled Scores for reading writing mathematics scores

where ACT and SAT scores are required, for the middle range of the freshman class

number of first-time, full-time and part-time students at undergraduate and graduate levels

number of degree or certificate seeking undergraduate who have transferred

percentage of male and female undergraduates percentage of first-time, full-time, degree or

certificate students who are from the state in which the institution is located; the percentage of students who are from other states, the percentage of students who are international students

percentage of first-time, full-time, degree or

certificate undergraduates enrolled by race and ethnic background

percentage of undergraduate students formally registered with the office of disability services as student’s with disabilities, if the percentage is 3% or less the institution reports “3% or less”

percentage of first-time, full-time, degree or certificate undergraduates who obtain a degree or certificate within, the normal time for completion

Not later than August 14, 2009



Item # Subject


citations]


*Effective Date


from the program, 150% of the normal time to complete the program, 200% percent of the normal time to complete the program

number of certificates, associate degrees, baccalaureate degrees, master’s degrees, professional degrees and doctoral degrees awarded

undergraduate major areas of study with the highest number awarded

student-faculty ratio, the number of full-time and part-time faculty, number of graduate assistants with instructional responsibilities

Cost of attendance for first-time, full-time undergraduates living on campus

Cost of attendance for first-time, full-time undergraduate living off campus

In the case of public institutions the costs for first-time, full-time students enrolled as residents, and the costs for first-time, full-time students enrolled as non-residents

Average annual grant amount (Federal, State and institutional) awarded to first-time, full-time undergraduates receiving financial aid

Average annual amount of Federal student loans to enrolled undergraduate students

Total annual grant aid awarded to undergraduate students from the Federal government, a State, the institution or other sources

Percentage of first-time, full-time undergraduate students receiving Federal State and institutional grants, student loans and any other type of student financial assistance known by the institutions

Number of students enrolled receiving Pell Grants Cohort default rate Information on campus safety required under

Section 485(i) A link to the institutions Website that provides

student activities offered, services offered for student with disabilities, career and placement


Item # Subject


citations]


*Effective Date


services, policies related to transfer of credit from other institutions

A link to the applicable section of the Bureau of Labor and Statistics Website providing information on regional starting salaries in major occupations

The availability of alternative tuition plans including guaranteed tuition plans

174

College Navigator Website – School Pricing Summary Bill Section: 111 HEA Section: 132(i)(5-6)

ED will disclose on its College Navigator Website a list of institutions participating in Title IV that will include:

The average full-time undergraduate tuition and fees for each of the three most recent years that date is available.

The average net price of each of the three most recent years.

Beginning and ending 7/10/2010-6/30/2013 the average net price by income categories for the most recent academic year.

Beginning 7/1/2013 the average net price of students receiving Title IV aid by income categories for the three most recent academic years.

The average annual percentage change and the annual dollar change in the institution’s net price for the three most recent years.

A link to the College Navigator webpage providing the information in paragraph (1).

The Secretary will update the lists described in the College Navigator annually.

Provides the income categories that will apply to students who receive Federal Student Aid as:

$0-$30,000 $30,001-$48,000 $48,001-$75,000 $75,001-$110,000 $110,001 and more


Beginning July 10, 2010, and

ending June 30, 2013

Beginning July 1, 2013

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 33-34 )


Item # Subject


citations]


*Effective Date


At the Secretaries discretion income adjustments may be made based on the Consumer Price Index.

COST OF ATTENDANCE

175

Definition – Cost of Attendance Definition Bill Section: 111 HEA Section: 132(a)

The average annual cost of tuition, books, supplies, room and board and transportation for full time first-year, undergraduates enrolled at an institution of higher education.

NET PRICE

176

Definition – Net Price Bill Section: 111 HEA Section: 132(a)

The average yearly price charged to a full-time, undergraduate student receiving student aid after deducting aid by calculating the difference between the cost of attendance minus the total amount of need-based grant and merit based aid, from Federal State and institutional sources provided to students enrolled that year divided by the total number of students receiving need-based and merit based grants for the same year


TUITION AND FEES

177

Definition - Tuition and Fees Bill Section: 111 HEA Section: 132(a)

The average annual cost of tuition and fees for a full-time, first-time undergraduate enrolled in an institution of higher education

CALCULATIONS - NET PRICE AND TUITION AND FEES

178

Calculations of COA, Net Price and Tuition and Fees for Public Institutions Bill Section: 111 HEA Section: 132(b)

ED shall calculate the cost of attendance (COA), net price, and tuition and fees at a public institution except that : The COA, net price and tuition and fees shall be

calculated for full-time, first-time undergraduates who are residents of the State in which the institution is located

In determining the net price, the average need-based




Item # Subject


citations]


*Effective Date


and merit-based grant aid will be calculated based on the average total amount of said aid received by full-time, first-time undergraduate students who are residents of the state the institution is located, divided by the total number of resident students receiving need-based or merit-based aid at the institution.

SCHOOL REPORT TO ED

179

Report to ED Bill Section: 111 HEA Section: 132(e)(1)

If an institution is on the list of institutions that have the largest increase of percentage change in tuition and fees or net price over that last three academic periods, the institution shall submit a report to ED containing:

A description of the major areas in the institution’s budget with the greatest cost increases.

An explanation of the cost increases. A description of steps the institution will

take towards reducing costs in those areas. If included in this list for two or more

consecutive years. Provide a description of progress made on

steps taken to reduce costs that were included in the report for the prior year.

If the institution determines that any cost increases is not within the exclusive control of the institution:

1. An explanation of extent to which the institution determined the cost increase.

2. Identifying the agency or State government responsible for determining the cost increase


IN-STATE TUITION

In-state Tuition for Active Duty Military

States may not charge more than the in-state tuition rate at public institutions of higher education to service members (on active duty for at least 30 days), or their

The first period of enrollment that

begins after



Item # Subject


citations]


*Effective Date


180 Bill Section: 114 HEA Section: 135(a)-(c)

spouses, or dependent children. In-state rates continue to apply if the service member is re-assigned to a permanent duty station outside the state.

July 1, 2009 changes made to the HEA by enactment of the HEOA - (DCL page 36)

MAINTENANCE OF EFFORT

181

Maintenance of Effort Bill Section: 116 HEA Section: 137(a)-(b)

States must provide financial resources to institutions of higher education of at least the average amount over the last five years for: Non-capital and non-direct research and development

expenses for public institution, and Student financial aid for private institutions

August 14, 2008

For any academic year beginning on

or after July 1, 2008


182

Maintenance of Effort - Penalty and Waiver for States Bill Section: 116 HEA Section: 137(c)-(d)

States that violate the maintenance of effort requirements lose funding under the College Access Challenge Grant Program, until significant efforts are made to correct the violation. The requirements may be waived for exceptional circumstances, including natural disasters or unforeseen declines in state financial resources.

August 14, 2008

For any academic year beginning on

or after July 1, 2008


Title I General Provisions - Part D – Administrative Provisions for Delivery of Student Financial Assistance

ANNUAL SCHOOL CERTIFICATION

183

Annual School Certification - Prohibited Uses of Federal Funds Bill Section: 119 HEA Section: 151

Institutions of higher education and other postsecondary educational institutions must annually certify that they have not used any federal funds received under the HEA to pay any person to influence individuals within Congress or any agency, in regard to federal contracts, grants, loans, or cooperative agreements.

August 14, 2008 DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 38- 39)

Annual School No federal student aid funding under the HEA may be August 14, 2008 DCL GEN-08-12/


Item # Subject


citations]


*Effective Date


184

Certification - Lobbying and Earmarks Bill Section: 119 HEA Section: 151

used to hire a registered lobbyist or to pay for securing an earmark. The institution’s annual certification must also attest to adherence to this provision.

FP-08-10: Contains information on changes made to the HEA by enactment of the HEOA - (DCL page 39)

Title X – Private Student Loan Improvement

PRIVATE STUDENT LOAN TRANSPARENCY AND IMPROVEMENT ACT OF 2008

185

Title of Act Bill Section: 1011 Truth In Lending Act (TILA) 15 USC 1631 Section 140(c )

This title may be cited as the “Private Student Loan Transparency and Improvement Act of 2008”


186

Timing of Regulations Bill Section: 1002 TILA Section: 140(c )

Not later than 365 days after the date of enactment of this Act, Board of Governors of the Federal Reserve System (Board) shall issue regulations in final form to implement paragraphs (1), (2), (3), (4), (6). (7), and (8) of Section 128(e) and Section 140(c ) of the Truth in Lending Act (TILA), as added by this title, which regulations shall become effective not later than 6months after their date of issuance.


187

Effective Dates Bill Section: 1003 TILA Section: 140(c)

The effective dates of the provisions of Title X are as follows: (a) In general, except as provided for in subsection (b),

below, which is the timing of the implementation of the TILA changes, and as otherwise provided in this title, this Title X and the amendments made by this Title X shall become effective on the date of enactment.

(b) Effect not withstanding regulations - Paragraphs (1), (2), (3), (4), (6), (7), and (8) of new TILA Section 128(e) and Section 140(c) shall become effective on the earlier of the date which the regulations issued under Section 1002 become effective or 18 months after the date of enactment.

August 14, 2008



Item # Subject


citations]


*Effective Date


188

Amendments to Truth in Lending Act Bill Section: 1011 Pub. L. 90-321

The Truth in Lending Act (TILA) is the common name given to the National Consumer Credit Protection Act, which requires lenders to make credit disclosures to individual borrowers for certain types of loans. The provisions of the act are implemented by the Federal Reserve Board as Regulation Z.

189

Preventing Unfair and Deceptive Private Educational Lending Practices Bill Section: 1011(a) 15 USC 1601 et seq; 82 Stat. 146; Pub. L. 90-321

The TILA is amended, by adding at the end of Chapter 2, a new section. New section attempts to regulate the relationships between schools and lenders by prohibiting certain gifts to school representatives from lenders, defining preferred lender arrangements, prohibiting co-branding, and managing lender advisory boards, among other provisions.

Earlier of February 14, 2010, or

effective date of regulations


190

Definition - Covered Educational Institution Bill Section: 1011(a) TILA Section: 140(a)(1)(A) and (B)

The term covered educational institution means: Any educational institution that offers a

postsecondary educational degree, certificate, or program of study (including any institution of higher learning); and

Includes an agency, officer, or employee of the education institution.

191

Definition - Gift Bill Section: 1011(a) TILA Section: 140(a)(2)(A)(i)

Any gratuity, favor, discount, entertainment, hospitality, loan, or other item having more than a de minimis monetary value, including services, transportation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred.

192

Definition – Gift Recipients Bill Section: 1011(a) TILA Section: 140(a)(2)(A)(ii) (I) and (II)

A gift as defined by the law, provided to a family member of an officer, employee, or agent of a covered educational institution, or to any other individual based on that individual’s relationship with the officer, employee, or agent, if- the item is provided with the knowledge and

acquiescence of the officer, employee, or agent; and the officer, employee, or agent has reason to believe

the item was provided because of the official position


Item # Subject


citations]


*Effective Date


of the officer, employee, or agent

193

Definition – Gift Exclusions Bill Section: 1011(a) TILA Section: 140(a)(2)(B)(i-iv)

The term “gift” does not include: Standard informational material related to a

loan, default aversion, default prevention, or financial literacy;

Food, refreshments, training, or informational material furnished to an officer, employee, or agent of a covered educational institution, as an integral part of a training session or through participation in an advisory council that is designed to improve the service of the private educational lender to the covered educational institution, if such training or participation contributes to the professional development of the officer, employee, or agent of the covered educational institution;

Favorable terms, conditions, and borrower benefits on a private education loan provided to a student employed by the covered educational institution, if such terms, conditions, or benefits are not provided because of the student’s employment with the covered educational institution;

the provision of financial literacy counseling or services, including counseling or services provided in coordination with a covered educational institution, to the extent that such counseling or services are not undertaken to secure—

applications for private education loans or private education loan volume;

applications or loan volume for any Title IV loan, or

the purchase of a product or service of a specific private educational lender;

philanthropic contributions to a covered


Item # Subject


citations]


*Effective Date


educational institution from a private educational lender that are unrelated to private education loans and are not made in exchange for any advantage related to private education loans; or

state education grants, scholarships, or financial aid funds administered by or on behalf of a state

194

Definition - Institution of Higher Education Bill Section: 1011(a) TILA Section: 140(a)(3)

The term “institution of higher education” has the same meaning as in HEA Section 102.

195

Definition - Postsecondary Educational Expenses Bill Section: 1011(a) TILA Section: 140(a)(4)

Any of the expenses that are included as part of the cost of education, as defined under HEA Section 472.

196

Definition - Preferred Lender Arrangement Bill Section: 1011(a) TILA section: 140(a)(5)

The term preferred lender arrangement has the same meaning as in HEA Section 151.

197

Definition - Private Educational Lender Bill Section: 1011(a) TILA Section: 140(a)(6)

The term private education lender means: a financial institution, as defined in Section 3 of the

Federal Deposit Insurance Act (12 U.S.C. 1813) that solicits, makes, or extends private education loans;

a federal credit unions, as defined in Section 101 of the Federal Credit Union Act (12 U.S.C. 1752) that solicits, makes, or extends private education loans; and

any other person engaged in the business of soliciting, making, or extending private education loans

198

Definition – Private Educational Loan

A closed-end, non-government insured consumer credit transaction not secured by real property or a dwelling that is made to the consumer expressly for postsecondary


Item # Subject


citations]


*Effective Date


Bill Section: 1011(a) TILA Section: 140(a)(7)

educational expenses.

199

Definition - Revenue Sharing Bill Section: 1011(a) TILA Section: 140(a)(8)(A-C)

An arrangement between a covered educational institution and a private educational lender under which—

a private educational lender provides or issues private education loans with respect to students attending the covered educational institution;

the covered educational institution recommends to students or others the private educational lender or the private education loans of the private educational lender; and

the private educational lender pays a fee or provides other material benefits, including profit sharing, to the covered educational institution in connection with the private education loans provided to students attending the covered educational institution or a borrower acting on behalf of a student

200

Lender Prohibition - Gifts for Consideration or Revenue Sharing Bill Section: 1011(a) TILA Section: 140(b)(1-2)

A private educational lender may not, directly or indirectly: offer or provide any gift to a covered educational

institution in exchange for any advantage or consideration provided to such private educational lender related to its private education loan activities

or engage in revenue sharing with a covered educational institution


201

Lender Prohibition - Co-Branding Bill Section: 1011(a) TILA Section: 140(c )

A private educational lender may not use the name, emblem, mascot, or logo of the covered educational institution, or other words, pictures, or symbols readily identified with the covered educational institution, in the marketing of private educational loans in any way that implies that the covered educational institution endorses the private education loans offered by the private educational lender.

On the earlier of the date on which regulations issued

under HEOA Section 002

become effective or 18 months after date of enactment


Lender Prohibition Any person who is employed in the financial aid office of August 14, 2008 DCL GEN-08-12/ FP-08-10:


Item # Subject


citations]


*Effective Date


202

- Advisory Board Compensation other than Reasonable Expenses Bill Section: 1011(a) TILA Section: 140(d)

a covered educational institution, or who otherwise has responsibilities with respect to private education loans or other financial aid of the institution, and who serves on an advisory board, commission, or group established by a private educational lender or group of such lenders shall be prohibited from receiving anything of value from the private educational lender or group of lenders. Nothing in this subsection shall prohibit the reimbursement of reasonable expenses incurred by an employee of a school as part of their service on an advisory board, commission, or group described in this subsection.

Contains information on changes made to the HEA by enactment of the HEOA - (DCL pages 173-174)

203

Lender Prohibition - Prepayment Fees or Penalty Bill Section: 1011(a) TILA Section: 140(e)

It shall be unlawful for any private educational lender to impose a fee or penalty on a borrower for early repayment or prepayment of any private education loan.

August 14, 2008


204

Definition - Creditor Bill Section: 1011(b) TILA Section: 140(b)

TILFA Section 103(f) is amended by adding at the end the following:

“The term ‘creditor’ includes a private educational lender (as that term is defined in Section 140) for purposes of this title.”

205

School Disclosure - Reimbursements for Service on Advisory Boards Bill Section: 1011(c ) HEA Section: 485 TILA Section: 140( c)

HEA Section 485, as amended by this Act, is further amended by adding at the end the following: Disclosures of Reimbursements for Service on Advisory Boards- (1) Disclosure: Each institution of higher education participating in any program under this title must report, on an annual basis, to ED, any reasonable expenses paid or provided under TILA 140(d) to any employee who is employed in the financial aid office of the institution, or who otherwise has responsibilities with respect to education loans or other financial aid of the institution. Such reports must include— the amount for each specific instance of reasonable

expenses paid or provided;



Item # Subject


citations]


*Effective Date


the name of the financial aid official, other employee, or agent to whom the expenses were paid or provided;

the dates of the activity for which the expenses were paid or provided; and

a brief description of the activity for which the expenses were paid or provided

(2) Report To Congress: ED is required to summarize the information received from schools above in a report and transmit such report annually to the authorizing committees.

206

Lender Civil Liabilities Bill Section: 1012 TILA Section: 130(a) and Sec. 130(e)

In the case of any successful action to enforce the damage claim or in any action in which a person is determined to have a right of rescission, the costs of the action, together with a reasonable attorney’s fee as determined by the court.


207

Lender Disclosure - Private Education Loan Applications and Solicitations Bill Section: 1021(a) TILA Section: 128(e)(1)

In any application for a private education loan, or a solicitation for a private education loan without requiring an application, the private educational lender must disclose to the borrower, clearly and conspicuously: (A) the potential range of rates of interest; (B) whether the rate of interest applicable to the loan is fixed

or variable; (C) limitations on interest rate adjustments, both in terms of

frequency and amount, or the lack thereof; (D) requirements for a co-borrower, including any changes in

the applicable interest rates without a co-borrower; (E) potential finance charges, late fees, penalties and

adjustments to principal, based on defaults or late payments of the borrower;

(F) fees or range of fees applicable to the private education loan;

(G) term of the loan; (H) whether interest will accrue while the borrower is in

school; (I) payment deferral options; (J) general eligibility criteria; (K) example of the total cost of the loan over the life of the






Item # Subject


citations]


*Effective Date


loan: which must be calculated using the principal amount and the maximum rate of interest actually offered by the private educational lender; and calculated both with and without capitalization of interest, if an option exists for postponing interest payments;

(L) that a covered educational institution may have school-specific education loan benefits and terms not detailed on the disclosure form

(M) that the borrower may qualify for Federal financial assistance through a program HEA Title IV, in lieu of, or in addition to, a loan from a non-Federal source;

(N) the interest rates available with respect to such Federal student financial assistance through HEA Title IV;

(O) Borrower must: o have the right to accept the terms of the loan and

consummate the transaction at any time within 30 calendar days (or such longer period as the private loan educational lender may provide) following the date on which the application is approved and the borrower receives the disclosure documents required under this subsection for the loan; and

o except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the lender during the period described in clause (i), above;

(P) that, before a private education loan may be consummated, the borrower must obtain from the relevant institution of higher education the form required under paragraph (3), and complete, sign, and return such form to the private educational lender;

(Q) that the consumer may obtain additional information concerning such Federal student financial assistance from their covered educational institution or at the Website of the Department of Education; and

(R) other such information as the Board shall prescribe, by rule, as necessary or appropriate for consumers to make informed borrowing decisions

Lender Disclosure - Private Education Loan Approval Bill Section: 1021(a)

With the approval of a private education loan application, and before the loan transaction is consummated, the private educational lender must disclose to the borrower, clearly and conspicuously, the following: (A) the applicable rate of interest in effect on the date of

On the earlier of the date on which regulations issued under HEOA Sec.

1002 become



Item # Subject


citations]


*Effective Date


208

TILA Section: 128(e)(2) approval; (B) whether the rate of interest applicable to the private

education loan is fixed or variable; (C) limitations on interest rate adjustments, in terms of

frequency and amount, or the lack thereof; (D) the initial approved principal amount; (E) applicable finance charges, late fees, penalties, and

adjustments to principal, based on borrower defaults or late payments, including limitations on the discharge of a private education loan in bankruptcy;

(F) fees or range of fees applicable to the loan; (G) maximum term under the loan program; (H) estimate of total amount for repayment, at both the interest

rate in effect on the date of approval and at the maximum possible rate of interest offered by the private educational lender and applicable to the borrower, to the extent that such maximum rate may be determined, of if not, a good faith estimate thereof;

(I) any principal and interest payments required while the student to whom the loan relates is enrolled at a covered institution and unpaid interest which will accrue during such enrollment;

(J) payment deferral options applicable to the borrower; (K) whether monthly payments are graduated; (L) Firm offer period

(i) borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within 30 calendar days (or such longer period as the private loan educational lender may provide) following the date on which the application is approved and the borrower receives the disclosure documents required under this subsection for the loan; and

(ii) except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the lender during the period described in clause (i), above;

(M) that the borrower (i) may qualify for Federal financial assistance through

a program under Title IV of the Higher Education Act of 1965, in lieu of, or in addition to, a loan from a non-federal source;

(ii) may obtain additional information concerning such

effective or 18 months after date

of enactment

(DCL page 174)


Item # Subject


citations]


*Effective Date


assistance from their institution of higher education or the Website of the Department of Education

(N) the interest rates available with respect to Federal financial assistance through a program under title IV of the Higher Education Act of 1965;

(O) the maximum monthly payment, calculated using the maximum rate of interest actually offered by the lender and applicable to the borrower, to the extent that such maximum rate may be determined, or if not, a good faith estimate thereof; and

(P) other information as the Board shall prescribe, by rule, as necessary or appropriate for consumers to make informed borrower decisions

209

Applicant Self-Certification Bill Section: 1021(a) TILA Section: 128(e)(3)

Before a private educational lender may consummate a private education loan with respect to a student attending school, the lender must obtain from the applicant for the private education loan the form developed by ED under HEA Section 155 (Self-Certification Form for Private Education Loans), signed by the applicant, in written or electronic form. RULE OF CONSTRUCTION- No other provision of this subsection shall be construed to require a private educational lender to perform any additional duty under this paragraph, other than collecting the form required under subparagraph (A).


under HEOA Section1002



210

Lender Disclosure – Private Loan Consummation Bill Section: 1021(a) TILA Section: 128(e)(4)

With the consummation of a private education loan, a private educational lender must disclose to the borrower:

rate of interest (adjusted, as necessary, for the rate of interest in effect on the date of consummation, based on the index used for the loan);

subparagraphs (B) through (K) and (M) through (P) above; and

the right to cancel within 3 business days of the date on which the loan is consummated





Lender Disclosures – Model Form Bill Section: 1021(a)

Not later than 2 years after the date of enactment of this subsection, the Board shall, based on consumer testing, and in consultation with ED, develop and issue model forms that may be used, at the option of the lender, for the provision of

Not later than 2 years after date of

enactment

DCL GEN-08-12/ FP-08-10: Contains information on changes made to the HEA


Item # Subject


citations]


*Effective Date


211

TILA Section: 128(e)(5) disclosures required under this subsection. Model forms developed under this paragraph shall -

be comprehensible to borrowers, with a clear format and design;

provide for clear and conspicuous disclosures; enable borrowers easily to identify material terms of

the loan and to compare such terms among private education loans; and

be succinct, and use an easily readable type font

Safe Harbor - any lender that elects to provide a model form developed under this subsection that accurately reflects the practices of the private educational lender shall be deemed to be in compliance with the disclosures required under this subsection.

by enactment of the HEOA - (DCL page 174)

212

Borrower – Acceptance of Loan Terms and Prohibition on Changes Bill Section: 1021(a) TILA Section: 128(e)(6)

With respect to a private education loan, the borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within 30 calendar days (or such longer period as the private educational lender may provide) following the date on which the application for the private education is approved and the borrower receives the disclosure documents required under this subsection for the loan, and the rates and terms of the loan may not be changed by the private educational lender during that period. Prohibition on Changes – Except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the lender prior to the earlier of:

the date of acceptance of the terms of the loan and consummation of the transaction by the borrower, as described in subparagraph (A); or

the expiration of the 30-day period [subparagraph (A)]


213

Borrower – Right to Cancel Bill Section: 1021(a) TILA Section: 128(e)(7

With respect to a private education loan, the borrower may cancel the loan, without penalty to the borrower, at any time within 3 business days of the date the loan is consummated, and the lender must disclose such right to the borrower.

On the earlier of the date on which

regulations issued under Section 1002 become effective or 18 months after date

of enactment



Item # Subject


citations]


*Effective Date


214

Lender - Prohibition on Disbursement Bill Section: 1021(a) TILA Section: 128(e)(8)

No funds may be disbursed with respect to a loan until the expiration of the 3-day period prior to consummation of the loan.

On the earlier of the date on which

regulations issued under Section 1002 become effective or 18 months after date

of enactment

215

Regulations - Duplicative Disclosure Requirements Bill Section: 1021(a) TILA Section: 128(e)(9)

In issuing regulations under this subsection, the Board shall prevent, to the extent possible, duplicative disclosure requirements for private educational lenders that are otherwise required to make disclosures under this title, except that in any case in which the disclosure requirements of this subsection differ or conflict with the disclosure requirements of any other provision of this title, the requirements of this subsection shall be controlling.


216

Definitions Bill Section: 1021(a) TILA Section: 128(e)(10)

The terms covered educational institution, private educational lender, and private education loan have the same meanings as in Section 140.

217

Lender - Preferred Lender Arrangements Bill Section: 1021(a) TILA Section: 128(e)(11)

Each lender, that has a preferred lender arrangement with a covered educational institution, must annually, (by a date determined by the Board, in consultation with ED) provide to the covered educational institution such information as the Board determines to include in the model form developed under TILA Section 128(e)(5) (Format of Disclosures) for each type of private education loan that the lender plans to offer to students attending the covered educational institution, or to the families of such students, for the next award year.

218

Applicant - Self-Certification Form Bill Section: 1021(b) HEA Section: Title I Part E Sec. 155

HEA Title I Part E, as added by this Act, is further amended by inserting Section 155. The language in Section 1021(b) is the same as Section 120 of HEOA.

219

Exemption - Truth in Lending Act Bill Section: 1022

The exemption from the Truth in Lending requirements for private student loans with an amount financed over $25,000 is removed.


Item # Subject


citations]


*Effective Date


TILA Section: 104(3) * This document includes any effective dates listed in the CCRAA provisions. OGSLP will continue to work with the National Council of Higher Education Loan Programs (NCHELP) regarding the effective date of these provisions. NOTE: This impact summary has been developed by OGSLP to highlight major provisions of the Higher Education Opportunity Act (HEOA). The information contained in this document will be updated as OGSLP receives clarification and additional guidance from the U.S. Department of Education, the National Council of Higher Education Loan Programs (NCHELP), and other industry sources.

ocap.org · 2009-06-19 · draft . higher education opportunity act (heoa) impact summary . title...

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